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Market Sentiment Around Loss-Making Kraken Robotics Inc. (CVE:PNG)

Kraken Robotics Inc. (CVE:PNG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kraken Robotics Inc., a marine technology company, engages in the design, manufacture, and sale of software-centric sensors, batteries, and underwater robotic systems for unmanned underwater vehicles used in military and commercial applications. With the latest financial year loss of CA$3.5m and a trailing-twelve-month loss of CA$5.5m, the CA$60m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Kraken Robotics' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Kraken Robotics

Kraken Robotics is bordering on breakeven, according to the 2 Canadian Electronic analysts. They expect the company to post a final loss in 2022, before turning a profit of CA$4.1m in 2023. The company is therefore projected to breakeven just over a year from today. 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 152%, which is rather optimistic! 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

Underlying developments driving Kraken Robotics' growth isn’t the focus of this broad overview, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Kraken Robotics currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Kraken Robotics' case is 47%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Kraken Robotics, so if you are interested in understanding the company at a deeper level, take a look at Kraken Robotics' company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

  1. Valuation: What is Kraken Robotics 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 Kraken Robotics 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 Kraken Robotics’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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