StarTek, Inc. (NYSE:SRT) Is About To Turn The Corner

We feel now is a pretty good time to analyse StarTek, Inc.'s (NYSE:SRT) business as it appears the company may be on the cusp of a considerable accomplishment. StarTek, Inc., a business process outsourcing company, provides omni-channel customer experience, digital transformation, and technology services in various markets. On 31 December 2020, the US$332m market-cap company posted a loss of US$39m for its most recent financial year. The most pressing concern for investors is StarTek's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for StarTek

According to the 2 industry analysts covering StarTek, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$13m in 2021. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 123% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of StarTek's upcoming projects, though, take into account 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 issue worth mentioning. StarTek currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in StarTek's case is 55%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on StarTek, so if you are interested in understanding the company at a deeper level, take a look at StarTek's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is StarTek 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 StarTek 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 StarTek’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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