When Will Westpay AB (STO:WPAY) Turn A Profit?

Westpay AB (STO:WPAY) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Westpay AB provides smart transaction and payment solutions in Europe, Africa, South Asia, Southeast Asia, and Nordic countries. The company’s loss has recently broadened since it announced a kr8.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr12m, moving it further away from breakeven. 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.

Check out our latest analysis for Westpay

Expectations from some of the Swedish Electronic analysts is that Westpay is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of kr5.0m in 2025. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 104% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Westpay's growth isn’t the focus of this broad overview, though, keep 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. Westpay currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Westpay's case is 50%. A higher level of debt requires more stringent capital management which increases the risk in 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 relevant 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.