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We feel now is a pretty good time to analyse PlayAGS, Inc.'s (NYSE:AGS) business as it appears the company may be on the cusp of a considerable accomplishment. PlayAGS, Inc. designs and supplies gaming products and services for the gaming industry in the United States and internationally. The US$233m market-cap company announced a latest loss of US$23m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on PlayAGS' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 7 industry analysts covering PlayAGS, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$14m in 2023. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 107% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of PlayAGS' upcoming projects, however, take into account 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 PlayAGS 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 around investing in the loss-making company.
There are too many aspects of PlayAGS to cover in one brief article, but the key fundamentals for the company can all be found in one place – PlayAGS' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:
Valuation: What is PlayAGS 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 PlayAGS 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 PlayAGS’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.