Analysts Are Optimistic We'll See A Profit From Kudelski SA (VTX:KUD)

Kudelski SA (VTX:KUD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kudelski SA develops and delivers a range of secure content protection solutions to address the needs of the digital television ecosystem in Internet, satellite, cable, terrestrial, and hybrid end-to-end transmission systems in Switzerland, the United States, France, Norway, and internationally. The CHF259m market-cap company announced a latest loss of US$23m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Kudelski's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Kudelski

According to the 3 industry analysts covering Kudelski, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$8.4m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 81%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Kudelski given that this is a high-level summary, though, 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.

One thing we would like to bring into light with Kudelski is its debt-to-equity ratio of 134%. 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.

Next Steps:

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

1. Valuation: What is Kudelski 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 Kudelski 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 Kudelski’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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