Chegg Inc (NYSE:CHGG) Is Expected To Breakeven

Chegg Inc’s (NYSE:CHGG): Chegg, Inc. operates direct-to-student learning platform that supports students on their journey from high school to college and into their career with tools designed to help them pass their test, pass their class, and save money on required materials. The US$2.42B market-cap company announced a latest loss of -US$20.28M on 31 December 2017 for its most recent financial year result. As path to profitability is the topic on CHGG’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for CHGG.

Check out our latest analysis for Chegg

Expectation from analysts is CHGG is on the verge of breakeven. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$1.20M in 2018. So, CHGG is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which CHGG must grow year-on-year. It turns out an average annual growth rate of 146.01% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:CHGG Past Future Earnings Apr 26th 18
NYSE:CHGG Past Future Earnings Apr 26th 18

Given this is a high-level overview, I won’t go into detail the detail of CHGG’s upcoming projects, however, take into account 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 I’d like to point out is that CHGG has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. This means that CHGG has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on CHGG, so if you are interested in understanding the company at a deeper level, take a look at CHGG’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:

  1. Valuation: What is CHGG 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 CHGG 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 Chegg’s board and the CEO’s back ground.
  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.