Breakeven Is Near for China Online Education Group (NYSE:COE)
With the business potentially at an important milestone, we thought we'd take a closer look at China Online Education Group's (NYSE:COE) future prospects. China Online Education Group, through its subsidiaries, provides online English language education services to students in the People's Republic of China and the Philippines. The company’s loss has recently broadened since it announced a CN¥104m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥325m, moving it further away from breakeven. Many investors are wondering about the rate at which China Online Education Group will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for China Online Education Group
China Online Education Group is bordering on breakeven, according to the 2 American Consumer Services analysts. They expect the company to post a final loss in 2020, before turning a profit of CN¥168m in 2021. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 108% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of China Online Education Group's upcoming projects, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. China Online Education Group currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
This article is not intended to be a comprehensive analysis on China Online Education Group, so if you are interested in understanding the company at a deeper level, take a look at China Online Education Group's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:
Valuation: What is China Online Education Group 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 China Online Education Group is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on China Online Education Group’s board and the CEO’s background.
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.
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. 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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