Yahoo Finance PlayAGS, Inc. (NYSE:AGS): Is Breakeven Near?
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$216m market-cap company posted a loss in its most recent financial year of US$23m and a latest trailing-twelve-month loss of US$22m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which PlayAGS 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.
View our latest analysis for PlayAGS
Consensus from 8 of the American Hospitality analysts is that PlayAGS is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$7.8m in 2023. So, the company is predicted to breakeven just over a year 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 81%, which is rather optimistic! 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 PlayAGS' upcoming projects, however, bear in mind that generally 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, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of PlayAGS 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 PlayAGS, take a look at PlayAGS' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:
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.
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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