Greater Than AB (STO:GREAT): Is Breakeven Near?

Greater Than AB (STO:GREAT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Greater Than AB provides artificial intelligence to price risk per vehicle in real-time for auto insurance carriers and car manufacturers in Sweden. The kr1.3b market-cap company announced a latest loss of kr24m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Greater Than will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Greater Than

According to some industry analysts covering Greater Than, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of kr29m in 2022. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 93% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Greater Than given that this is a high-level summary, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Greater Than currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Greater Than's case is 44%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Greater Than which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Greater Than, take a look at Greater Than's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Valuation: What is Greater Than worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Greater Than is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Greater Than’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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