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NFON AG's (FRA:NFN): NFON AG provides cloud private branch exchange (PBX) services in Germany, Austria, the United Kingdom, and Spain. On 31 December 2018, the €151m market-cap posted a loss of -€8.1m for its most recent financial year. The most pressing concern for investors is NFN’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for NFN.
According to the 4 industry analysts covering NFN, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of €885k in 2021. Therefore, NFN is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which NFN must grow year-on-year. It turns out an average annual growth rate of 45% 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 NFN’s growth isn’t the focus of this broad overview, 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 I’d like to point out is that NFN has managed its capital judiciously, with debt making up 0.3% of equity. This means that NFN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of NFN to cover in one brief article, but the key fundamentals for the company can all be found in one place – NFN’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:
- Historical Track Record: What has NFN's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NFON’s board and the CEO’s back ground.
- 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.