We feel now is a pretty good time to analyse Quarterhill Inc.'s (TSE:QTRH) business as it appears the company may be on the cusp of a considerable accomplishment. Quarterhill Inc., together with its subsidiaries, operates in intelligent transportation system business in Canada and internationally. The CA$211m market-cap company announced a latest loss of CA$44m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Quarterhill's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Quarterhill

According to the 3 industry analysts covering Quarterhill, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$6.0m in 2025. The company is therefore projected to breakeven just over a year 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 141% 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.

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

One thing we would like to bring into light with Quarterhill is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Quarterhill's case is 40%. 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 Quarterhill, so if you are interested in understanding the company at a deeper level, take a look at Quarterhill's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

1. Valuation: What is Quarterhill 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 Quarterhill 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 Quarterhill’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.