We feel now is a pretty good time to analyse X2M Connect Limited's (ASX:X2M) business as it appears the company may be on the cusp of a considerable accomplishment. X2M Connect Limited, a technology company, provides Internet of Things business technology for the utility sector in the Asia-Pacific. On 30 June 2022, the AU$15m market-cap company posted a loss of AU$10m for its most recent financial year. Many investors are wondering about the rate at which X2M Connect will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Expectations from some of the Australian Electronic analysts is that X2M Connect is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$2.2m in 2025. The company is therefore projected to breakeven around 3 years from now. 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 72%, which is extremely buoyant. 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 X2M Connect's upcoming projects, though, bear in mind that generally 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 36% 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.
There are key fundamentals of X2M Connect which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at X2M Connect, take a look at X2M Connect's company page on Simply Wall St. We've also put together a list of important aspects you should further research:
Valuation: What is X2M Connect 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 X2M Connect 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 X2M Connect’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.
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