Stock Analysis

Rekor Systems, Inc. (NASDAQ:REKR): Is Breakeven Near?

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NasdaqCM:REKR
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We feel now is a pretty good time to analyse Rekor Systems, Inc.'s (NASDAQ:REKR) business as it appears the company may be on the cusp of a considerable accomplishment. Rekor Systems, Inc., through its subsidiaries, provides vehicle identification and management systems based on artificial intelligence in the United States, Canada, and internationally. The company’s loss has recently broadened since it announced a US$16m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$18m, moving it further away from breakeven. Many investors are wondering about the rate at which Rekor Systems will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Rekor Systems

Expectations from some of the American Professional Services analysts is that Rekor Systems is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$4.5m in 2022. So, the company is predicted 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 90%, 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.

earnings-per-share-growth
NasdaqCM:REKR Earnings Per Share Growth February 10th 2021

We're not going to go through company-specific developments for Rekor Systems given that this is a high-level summary, however, keep in mind that generally 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 5.3% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has Rekor Systems' 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 Rekor Systems' 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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