Northern Data AG (FRA:NB2) Is About To Turn The Corner

We feel now is a pretty good time to analyse Northern Data AG's (FRA:NB2) business as it appears the company may be on the cusp of a considerable accomplishment. Northern Data AG develops, builds, and provides infrastructure solutions in the field of high-performance computing solutions worldwide. The company’s loss has recently broadened since it announced a €8.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of €46m, moving it further away from breakeven. The most pressing concern for investors is Northern Data'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 Northern Data

Northern Data is bordering on breakeven, according to the 2 German Software analysts. They expect the company to post a final loss in 2020, before turning a profit of €118m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 94% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Northern Data's growth isn’t the focus of this broad overview, though, bear in mind that by and large 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 aspect worth mentioning. Northern Data currently has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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 Northern Data 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 Northern Data, take a look at Northern Data's company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Northern Data 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 Northern Data 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 Northern Data’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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