We Might See A Profit From Northern Data AG (FRA:NB2) Soon

Northern Data AG (FRA:NB2) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 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. As path to profitability is the topic on Northern Data's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Northern Data

According to the 3 industry analysts covering Northern Data, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of €93m in 2021. Therefore, the company is expected to breakeven roughly 12 months 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 97% year-on-year, on average, 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 Northern Data given that this is a high-level summary, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Northern Data has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

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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