Yahoo Finance PlayAGS, Inc.'s (NYSE:AGS) Shift From Loss To Profit
PlayAGS, Inc.'s (NYSE:AGS): PlayAGS, Inc. designs and supplies gaming products and services for the gaming industry in the United States and internationally. On 31 December 2019, the US$137m market-cap posted a loss of -US$11.8m for its most recent financial year. Many investors are wondering the rate at which AGS will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for AGS’s growth and when analysts expect the company to become profitable.
View our latest analysis for PlayAGS
AGS is bordering on breakeven, according to the 9 Hospitality analysts. They expect the company to post a final loss in 2020, before turning a profit of US$7.4m in 2021. So, AGS is predicted to breakeven approximately a few months from now. How fast will AGS have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 87% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, AGS may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for AGS given that this is a high-level summary, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. AGS currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in AGS’s case, it 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 AGS which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at AGS, take a look at AGS’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should look at:
Valuation: What is AGS 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 AGS 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 back ground.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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