Market Sentiment Around Loss-Making Heeros Oyj (HEL:HEEROS)

Heeros Oyj (HEL:HEEROS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Heeros Oyj provides cloud-based financial management solutions. The company’s loss has recently broadened since it announced a €294k loss in the full financial year, compared to the latest trailing-twelve-month loss of €388k, moving it further away from breakeven. The most pressing concern for investors is Heeros Oyj's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Heeros Oyj

Heeros Oyj is bordering on breakeven, according to some Finnish Software analysts. They expect the company to post a final loss in 2020, before turning a profit of €500k in 2021. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 70%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Heeros Oyj given that this is a high-level summary, however, keep in mind that generally 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 issue worth mentioning. Heeros Oyj currently has a debt-to-equity ratio of 110%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Heeros Oyj 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 Heeros Oyj 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 Heeros Oyj’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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