Yahoo Movies Megaport Limited's (ASX:MP1) Shift From Loss To Profit
We feel now is a pretty good time to analyse Megaport Limited's (ASX:MP1) business as it appears the company may be on the cusp of a considerable accomplishment. Megaport Limited provides elastic interconnection services to the enterprises and service providers in Australia, New Zealand, Hong Kong, Singapore, Japan, North America, and Europe. On 30 June 2022, the AU$1.1b market-cap company posted a loss of AU$48m for its most recent financial year. Many investors are wondering about the rate at which Megaport 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 Megaport
Megaport is bordering on breakeven, according to the 13 Australian IT analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$27m in 2025. The company is therefore projected to breakeven around 3 years from today. 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 93% 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.
We're not going to go through company-specific developments for Megaport given that this is a high-level summary, though, bear in mind that typically 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 judiciously, with debt making up 9.6% 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:
This article is not intended to be a comprehensive analysis on Megaport, so if you are interested in understanding the company at a deeper level, take a look at Megaport's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:
Valuation: What is Megaport 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 Megaport is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Megaport’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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