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NFON AG’s (FRA:NFN): NFON AG provides cloud private branch exchange (PBX) services in Germany, Austria, the United Kingdom, and Spain. On 31 December 2018, the €158m market-cap posted a loss of -€8.1m for its most recent financial year. The most pressing concern for investors is NFN’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NFN, its year of breakeven and its implied growth rate.
Consensus from the 4 Telecom analysts is NFN is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of €885k in 2021. So, NFN is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, I calculated the rate at which NFN must grow year-on-year. It turns out an average annual growth rate of 45% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of NFN’s upcoming projects, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that NFN has managed its capital judiciously, with debt making up 0.3% of equity. This means that NFN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on NFN, so if you are interested in understanding the company at a deeper level, take a look at NFN’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should look at:
- Historical Track Record: What has NFN’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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 back ground.
- 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.