NRC Group (OB:NRC): Accelerating Losses Challenge Optimism Ahead of Forecasted Profit Turnaround

NRC Group (OB:NRC) remains unprofitable, with losses having accelerated over the past five years at a rate of 45.1% per year. The company is expected to turn a corner, as earnings are forecast to grow 85.58% per year with profitability anticipated within the next three years. Revenue is also set to outpace the Norwegian market average with a 7.7% annual growth rate. Investors will note NRC’s low price-to-sales ratio of 0.2x compared to peers, a factor that hints at potential upside if the company can meet its operational forecasts.

See our full analysis for NRC Group.

The real test is how these numbers stack up against the prevailing market narratives in the community. While some views could be reinforced, others may be challenged as we dig deeper.

Curious how numbers become stories that shape markets? Explore Community Narratives

Losses Widened 45.1% Annually

• NRC's net losses have grown at a steep 45.1% annual pace over the past five years, making the company one of the more aggressively loss-making players in its industry for this period.
• What’s surprising is that, despite this sharp deterioration, the prevailing market view remains focused on upcoming growth. Investors seem willing to look past the historic losses in anticipation of NRC reaching profitability within the next three years.
  • This optimism draws on forecasts for an 85.58% per year earnings rebound and a return to profits by year three.
  • Yet, some caution lingers, as the persistent growth of losses places significant pressure on NRC to not only halt losses but also deliver promised earnings growth.

Price-To-Sales Ratio Sits Well Below Peers

• NRC trades at a price-to-sales ratio of 0.2x, compared to 0.5x for the broader European construction sector and 0.8x among direct peers. This discount suggests shares are priced well below industry benchmarks.
• Despite the low valuation, the discussion centers on whether NRC can convert this deep discount into genuine shareholder returns.
  • Investors looking for value argue that the significant spread versus sector metrics reflects both NRC's unprofitable status and investor skepticism, but also paves the way for the stock to outperform if growth materializes as forecast.
  • On the other hand, bulls highlight that the well-below-average ratio could allow for multiple expansion as soon as operational turnaround signals emerge.

Share Price Instability Emerges as a Key Risk

• The past three months have seen NRC’s share price move unpredictably, highlighting a lack of stability even as the company positions itself for future recovery.
• This pattern challenges optimistic outlooks with the reality that the market is yet to fully trust NRC’s turnaround plan.
  • Frequent share price swings signal that investors remain sensitive to news flow and progress on profitability, increasing the risk for those entering at current levels.
  • Still, the broader market view points out that if NRC does beat its operational forecasts, improved stability could quickly follow a return to profit and revenue growth above the market average.

See our latest analysis for NRC Group.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on NRC Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

NRC’s accelerating losses, unpredictable share price, and skepticism around its turnaround highlight how inconsistent performance can weigh on investor confidence.

To target more reliable results, check out stable growth stocks screener (2083 results) for companies with consistent earnings and revenue growth that could give you peace of mind.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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