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S4 Capital plc (LON:SFOR): When Will It Breakeven?

We feel now is a pretty good time to analyse S4 Capital plc's (LON:SFOR) business as it appears the company may be on the cusp of a considerable accomplishment. S4 Capital plc, together with its subsidiaries, operates as a digital advertising and marketing services company in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The UK£621m market-cap company announced a latest loss of UK£57m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on S4 Capital's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for S4 Capital

S4 Capital is bordering on breakeven, according to the 7 British Media analysts. They expect the company to post a final loss in 2022, before turning a profit of UK£13m in 2023. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 78%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving S4 Capital's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 39% 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:

There are too many aspects of S4 Capital to cover in one brief article, but the key fundamentals for the company can all be found in one place – S4 Capital's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

  1. Valuation: What is S4 Capital 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 S4 Capital 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 S4 Capital’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.

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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