Sosandar Plc (LON:SOS) Has Found A Path To Profitability

·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at Sosandar Plc's (LON:SOS) future prospects. Sosandar Plc manufactures and distributes clothing products through internet and mail order primarily in the United Kingdom. On 31 March 2022, the UK£47m market-cap company posted a loss of UK£142k for its most recent financial year. As path to profitability is the topic on Sosandar's 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 Sosandar

Consensus from 2 of the British Luxury analysts is that Sosandar is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of UK£1.7m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 65% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

We're not going to go through company-specific developments for Sosandar given that this is a high-level summary, but, keep 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’d like to point out is that Sosandar has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Sosandar, so if you are interested in understanding the company at a deeper level, take a look at Sosandar's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:

  1. Valuation: What is Sosandar 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 Sosandar 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 Sosandar’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.

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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