creditshelf Aktiengesellschaft’s (ETR:CSQ) Shift From Loss To Profit

creditshelf Aktiengesellschaft’s (ETR:CSQ): creditshelf Aktiengesellschaft operates as an online SME financing company in Germany. The company’s loss has recently broadened since it announced a -€6.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of -€8.3m, moving it further away from breakeven. Many investors are wondering the rate at which CSQ will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for CSQ, its year of breakeven and its implied growth rate.

View our latest analysis for creditshelf

Consensus from the 2 Diversified Financial analysts is CSQ is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of €1.3m in 2022. Therefore, CSQ is expected to breakeven roughly 2 years from today. What rate will CSQ have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 61%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

XTRA:CSQ Past and Future Earnings April 1st 2020
XTRA:CSQ Past and Future Earnings April 1st 2020

I’m not going to go through company-specific developments for CSQ given that this is a high-level summary, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. CSQ has managed its capital judiciously, with debt making up 1.4% of equity. This means that CSQ has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on CSQ, so if you are interested in understanding the company at a deeper level, take a look at CSQ’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:

  1. Historical Track Record: What has CSQ’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.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on creditshelf’s board and the CEO’s back ground.
  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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