Yahoo Finance Merit Group plc (LON:MRIT) Has Found A Path To Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at Merit Group plc's (LON:MRIT) future prospects. Merit Group plc develops machine learning tools in the United Kingdom. The UK£11m market-cap company announced a latest loss of UK£3.6m on 31 March 2023 for its most recent financial year result. Many investors are wondering about the rate at which Merit Group 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.
View our latest analysis for Merit Group
Expectations from some of the British Media analysts is that Merit Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£100k in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 146% year-on-year, on average, which is rather optimistic! 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 Merit Group's 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 The company has managed its capital judiciously, with debt making up 15% 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 Merit Group, so if you are interested in understanding the company at a deeper level, take a look at Merit Group's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is Merit Group 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 Merit Group 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 Merit Group’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.
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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.
