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When Will Straker Translations Limited (ASX:STG) Turn A Profit?

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With the business potentially at an important milestone, we thought we'd take a closer look at Straker Translations Limited's (ASX:STG) future prospects. Straker Translations Limited, together with its subsidiaries, engages in the provision of translation services in Asia Pacific, Europe, the Middle East, Africa, and North America. On 31 March 2021, the AU$115m market-cap company posted a loss of NZ$6.0m for its most recent financial year. As path to profitability is the topic on Straker Translations' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Straker Translations

According to the 2 industry analysts covering Straker Translations, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of NZ$875k in 2024. So, the company is predicted to breakeven approximately 3 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 75% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Straker Translations' upcoming projects, however, bear in mind 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 Straker Translations is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Straker Translations' case is 42%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Straker Translations to cover in one brief article, but the key fundamentals for the company can all be found in one place – Straker Translations' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

  1. Valuation: What is Straker Translations 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 Straker Translations is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Straker Translations’s board and the CEO’s background.

  3. 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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