With the business potentially at an important milestone, we thought we'd take a closer look at Mercell Holding ASA's (OB:MRCEL) future prospects. Mercell Holding AS provides eTendering, tender notification, and bid manager solutions through online marketplace in Nordic region. The kr4.8b market-cap company announced a latest loss of kr146m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Mercell Holding's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to some industry analysts covering Mercell Holding, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of kr92m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 76% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Mercell Holding's growth isn’t the focus of this broad overview, 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.
One thing we would like to bring into light with Mercell Holding is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Mercell Holding's case is 68%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Mercell Holding 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 Mercell Holding, take a look at Mercell Holding's company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:
- Valuation: What is Mercell Holding 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 Mercell Holding is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Mercell Holding’s board and the CEO’s background.
- 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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