Analysts Expect Zegona Communications plc (LON:ZEG) To Breakeven Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Zegona Communications plc's (LON:ZEG) future prospects. Zegona Communications plc provides integrated telecommunications services in Spain. The UK£10b market-cap company’s loss lessened since it announced a €351m loss in the full financial year, compared to the latest trailing-twelve-month loss of €72m, as it approaches breakeven. As path to profitability is the topic on Zegona Communications' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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Consensus from 5 of the British Telecom analysts is that Zegona Communications is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of €143m in 2026. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 47% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Zegona Communications' growth isn’t the focus of this broad overview, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

View our latest analysis for Zegona Communications

Before we wrap up, there’s one issue worth mentioning. Zegona Communications currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Zegona Communications 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 Zegona Communications, take a look at Zegona Communications' company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is Zegona Communications 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 Zegona Communications 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 Zegona Communications’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.

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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.