ChannelAdvisor Corporation's (NYSE:ECOM): ChannelAdvisor Corporation provides software-as-a-service solutions in the United States and internationally. With the latest financial year loss of -US$7.6m and a trailing-twelve month of -US$6.8m, the US$274m market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is ECOM’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for ECOM, its year of breakeven and its implied growth rate.
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ECOM is bordering on breakeven, according to the 8 Software analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$130k in 2020. Therefore, ECOM is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which ECOM must grow year-on-year. It turns out an average annual growth rate of 66% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, ECOM may become profitable much later than analysts predict.
Underlying developments driving ECOM’s growth isn’t the focus of this broad overview, however, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I’d like to point out is that ECOM has managed its capital judiciously, with debt making up 23% of equity. This means that ECOM has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of ECOM which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ECOM, take a look at ECOM’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further examine:
- Valuation: What is ECOM 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 ECOM 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 ChannelAdvisor’s board and the CEO’s back ground.
- 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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.