When Will The NAGA Group AG (ETR:N4G) Turn A Profit?

We feel now is a pretty good time to analyse The NAGA Group AG's (ETR:N4G) business as it appears the company may be on the cusp of a considerable accomplishment. The NAGA Group AG develops technologies for the financial sector and use of blockchain technology. The company’s loss has recently broadened since it announced a €10m loss in the full financial year, compared to the latest trailing-twelve-month loss of €26m, moving it further away from breakeven. Many investors are wondering about the rate at which NAGA Group 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 NAGA Group

According to the 2 industry analysts covering NAGA Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of €850k in 2024. So, the company is predicted to breakeven just over a year from now. 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 66%, which signals high confidence from analysts. 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 NAGA Group's upcoming projects, but, bear 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 aspect worth mentioning. NAGA Group currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of NAGA Group which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at NAGA Group, take a look at NAGA Group's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is NAGA Group 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 NAGA Group 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 NAGA Group’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.