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Breakeven On The Horizon For Kleos Space S.A. (ASX:KSS)
We feel now is a pretty good time to analyse Kleos Space S.A.'s (ASX:KSS) business as it appears the company may be on the cusp of a considerable accomplishment. Kleos Space S.A., together with its subsidiaries, engages in the development of the space enabled, radio frequency (RF), geospatial intelligence, and data products in Luxembourg, the United Kingdom, and the United States. On 31 December 2022, the AU$21m market-cap company posted a loss of €7.3m for its most recent financial year. The most pressing concern for investors is Kleos Space's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Kleos Space
Expectations from some of the Australian Professional Services analysts is that Kleos Space is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of €4.9m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. 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 79% year-on-year, on average, 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.
We're not going to go through company-specific developments for Kleos Space given that this is a high-level summary, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Kleos Space is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Kleos Space's case is 48%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Kleos Space to cover in one brief article, but the key fundamentals for the company can all be found in one place – Kleos Space's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Valuation: What is Kleos Space 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 Kleos Space 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 Kleos Space’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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