When Can We Expect A Profit From Westpay AB (STO:WPAY)?

With the business potentially at an important milestone, we thought we'd take a closer look at Westpay AB's (STO:WPAY) future prospects. Westpay AB provides smart transaction and payment solutions in Europe, Africa, South East Asia, Australia, and Nordic countries. On 31 December 2020, the kr91m market-cap company posted a loss of kr14m for its most recent financial year. The most pressing concern for investors is Westpay's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Westpay

Westpay is bordering on breakeven, according to some Swedish Electronic analysts. They expect the company to post a final loss in 2021, before turning a profit of kr2.0m in 2022. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 114%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Westpay's upcoming projects, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. Westpay currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Westpay 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 Westpay, take a look at Westpay's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Historical Track Record: What has Westpay's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Westpay'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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