Loss-Making News55 AB (NGM:N55) Set To Breakeven

News55 AB (NGM:N55) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. News55 AB operates as a media company in Sweden. The kr21m market-cap company’s loss lessened since it announced a kr3.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr1.9m, as it approaches breakeven. As path to profitability is the topic on News55's investors mind, we've decided to gauge market sentiment. 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 News55

Expectations from some of the Swedish Media analysts is that News55 is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of kr467m in 2021. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 76% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of News55's upcoming projects, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with News55 is its debt-to-equity ratio of 111%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of News55 to cover in one brief article, but the key fundamentals for the company can all be found in one place – News55's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is News55 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 News55 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 News55’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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