With the business potentially at an important milestone, we thought we'd take a closer look at Kleos Space S.A.'s (ASX:KSS) future prospects. Kleos Space S.A. engages in the development of the space enabled, activity-based intelligence, and data-as-a-service (DaaS) products in Luxembourg and internationally. The AU$90m market-cap company posted a loss in its most recent financial year of €3.5m and a latest trailing-twelve-month loss of €3.9m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Kleos Space 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.
Expectations from some of the Australian Professional Services analysts is that Kleos Space is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of €971k in 2021. 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 108%, which signals high confidence from analysts. 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 Kleos Space's upcoming projects, however, take into account that by and large 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 debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
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 compiled a list of important aspects you should further research:
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.
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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