Market Sentiment Around Loss-Making NFON AG (ETR:NFN)

We feel now is a pretty good time to analyse NFON AG's (ETR:NFN) business as it appears the company may be on the cusp of a considerable accomplishment. NFON AG provides cloud private branch exchange (PBX) services in Germany, Austria, Italy, the United Kingdom, and Spain. The €294m market-cap company’s loss lessened since it announced a €11m loss in the full financial year, compared to the latest trailing-twelve-month loss of €4.0m, as it approaches breakeven. As path to profitability is the topic on NFON's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for NFON

NFON is bordering on breakeven, according to the 4 German Telecom analysts. They expect the company to post a final loss in 2022, before turning a profit of €5.0m in 2023. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 22% year-on-year, on average, 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 NFON's upcoming projects, though, keep in mind that typically 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. The company has managed its capital prudently, with debt making up 20% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of NFON 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 NFON, take a look at NFON's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Valuation: What is NFON 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 NFON 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 NFON’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.

If you’re looking to trade NFON, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.