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Cornerstone OnDemand, Inc. (NASDAQ:CSOD): Is Breakeven Near?

Simply Wall St

Cornerstone OnDemand, Inc.'s (NASDAQ:CSOD): Cornerstone OnDemand, Inc., together with its subsidiaries, provides learning and human capital management software through software-as-a-service model worldwide. With the latest financial year loss of -US$33.8m and a trailing-twelve month of -US$21.1m, the US$3.6b market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on CSOD’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for CSOD.

Check out our latest analysis for Cornerstone OnDemand

CSOD 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$14m in 2020. CSOD is therefore projected to breakeven around a few months from now. What rate will CSOD have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 108%, which signals high confidence from analysts. If this rate turns out to be too aggressive, CSOD may become profitable much later than analysts predict.

NasdaqGS:CSOD Past and Future Earnings, July 24th 2019

Given this is a high-level overview, I won’t go into details of CSOD’s upcoming projects, though, bear 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 I would like to bring into light with CSOD is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and CSOD has considerably exceeded this. 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 key fundamentals of CSOD 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 CSOD, take a look at CSOD’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:

  1. Valuation: What is CSOD 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 CSOD 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 Cornerstone OnDemand’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.