With the business potentially at an important milestone, we thought we'd take a closer look at Kudelski SA's (VTX:KUD) future prospects. 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. With the latest financial year loss of US$44m and a trailing-twelve-month loss of US$51m, the CHF178m market-cap company amplified its loss by moving further away from its breakeven target. 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.
Kudelski is bordering on breakeven, according to the 3 Swiss Electronic analysts. They expect the company to post a final loss in 2020, before turning a profit of US$6.0m in 2021. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 110%, which is rather optimistic! 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, but, keep 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. Kudelski currently has a debt-to-equity ratio of 139%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of Kudelski to cover in one brief article, but the key fundamentals for the company can all be found in one place – Kudelski's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
- 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.
- 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.
- 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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