Agilysys, Inc. (NASDAQ:AGYS) Is About To Turn The Corner

With the business potentially at an important milestone, we thought we'd take a closer look at Agilysys, Inc.'s (NASDAQ:AGYS) future prospects. Agilysys, Inc., together with its subsidiaries, operates as a developer and marketer of hardware and software products and services to the hospitality industry in North America, Europe, the Asia-Pacific, and India. The US$629m market-cap company posted a loss in its most recent financial year of US$34m and a latest trailing-twelve-month loss of US$34m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Agilysys 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 Agilysys

Agilysys is bordering on breakeven, according to the 4 American Software analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$2.6m in 2021. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 129% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Agilysys' growth isn’t the focus of this broad overview, though, keep in mind that generally 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. Agilysys currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Agilysys 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 Agilysys, take a look at Agilysys' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

1. Valuation: What is Agilysys 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 Agilysys 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 Agilysys’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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