Efecte Oy’s (HEL:EFECTE) Profit Outlook

Efecte Oy (HEL:EFECTE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Efecte Oy, a software company, provides cloud-based software as a service and identity management solutions in Finland, Sweden, Denmark, and Germany. The €44m market-cap company posted a loss in its most recent financial year of €1.4m and a latest trailing-twelve-month loss of €1.0m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Efecte Oy will turn a profit, with the big question being “when will the company breakeven?” We’ve put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Efecte Oy

According to some industry analysts covering Efecte Oy, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of €1.3m in 2022. So, the company is predicted to breakeven approximately 2 years from today. 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 93% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
HLSE:EFECTE Earnings Per Share Growth September 22nd 2020

We’re not going to go through company-specific developments for Efecte Oy given that this is a high-level summary, however, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Efecte Oy currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Efecte Oy, so if you are interested in understanding the company at a deeper level, take a look at Efecte Oy’s company page on Simply Wall St. We’ve also compiled a list of relevant aspects you should look at:

  1. Valuation: What is Efecte Oy 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 Efecte Oy 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 Efecte Oy’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. 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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