NKT A/S' (CPH:NKT) Profit Outlook

By
Simply Wall St
Published
September 30, 2020

NKT A/S (CPH:NKT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. NKT A/S develops, manufactures, and markets cables, accessories, and solutions worldwide. With the latest financial year loss of €84m and a trailing-twelve-month loss of €84m, the kr.6.1b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which NKT 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.

See our latest analysis for NKT

According to the 5 industry analysts covering NKT, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of €29m in 2022. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 101% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

CPSE:NKT Earnings Per Share Growth September 30th 2020

Underlying developments driving NKT's growth isn’t the focus of this broad overview, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 33% 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 too many aspects of NKT to cover in one brief article, but the key fundamentals for the company can all be found in one place – NKT's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

  1. Valuation: What is NKT 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 NKT 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 NKT’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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