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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. With the latest financial year loss of US$24m and a trailing-twelve-month loss of US$20m, the US$1.3b market-cap company alleviated its loss by moving closer towards its target of 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?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Agilysys is bordering on breakeven, according to the 4 American Software analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$730k in 2022. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 154%, 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.
Given this is a high-level overview, we won’t go into details of Agilysys' upcoming projects, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Agilysys has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of Agilysys to cover in one brief article, but the key fundamentals for the company can all be found in one place – Agilysys' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:
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.
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.
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.
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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