SECOS Group Limited's (ASX:SES): SECOS Group Limited manufactures and distributes sustainable packaging materials worldwide. With the latest financial year loss of AU$4.2m and a trailing-twelve month loss of AU$2.3m, the AU$56m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on SES’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for SES, its year of breakeven and its implied growth rate.

View our latest analysis for SECOS Group

SES is bordering on breakeven, according to Chemicals analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$200k in 2021. Therefore, SES is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which SES must grow year-on-year. It turns out an average annual growth rate of 111% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving SES’s growth isn’t the focus of this broad overview, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. SES has managed its capital prudently, with debt making up 8.6% of equity. This means that SES 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 SES to cover in one brief article, but the key fundamentals for the company can all be found in one place – SES’s company page on Simply Wall St. I’ve also compiled a list of important factors you should look at:

1. Valuation: What is SES 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 SES 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 SECOS Group’s board and the CEO’s back ground.

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.

This article by Simply Wall St is general in nature. 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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