We feel now is a pretty good time to analyse mCloud Technologies Corp.'s (CVE:MCLD) business as it appears the company may be on the cusp of a considerable accomplishment. mCloud Technologies Corp. provides asset management solutions combining IoT, cloud computing, artificial intelligence (AI), and analytics. The CA$74m market-cap company posted a loss in its most recent financial year of CA$12.2m and a latest trailing-twelve-month loss of CA$26.2m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which mCloud Technologies will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 4 industry analysts covering mCloud Technologies, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$6.1m in 2021. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 119% year-on-year, on average, which is extremely buoyant. 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 mCloud Technologies' upcoming projects, though, keep in mind 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 issue worth mentioning. mCloud Technologies currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of mCloud Technologies to cover in one brief article, but the key fundamentals for the company can all be found in one place – mCloud Technologies' company page on Simply Wall St. We've also compiled a list of key factors you should further research:
- Valuation: What is mCloud Technologies 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 mCloud Technologies 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 mCloud Technologies’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.
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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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