When Can We Expect A Profit From Sunlands Online Education Group (NYSE:STG)?
Sunlands Online Education Group’s (NYSE:STG): Sunlands Online Education Group, through its subsidiaries, provides online education services in the People’s Republic of China. The company’s loss has recently broadened since it announced a -CN¥918.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -CN¥1.20b, moving it further away from breakeven. The most pressing concern for investors is STG’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for STG, its year of breakeven and its implied growth rate.
See our latest analysis for Sunlands Online Education Group
STG is bordering on breakeven, according to Consumer Services analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of CN¥688.1m in 2020. Therefore, STG is expected to breakeven roughly a couple of months from now! What rate will STG 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 107%, which is extremely buoyant. If this rate turns out to be too aggressive, STG may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for STG given that this is a high-level summary, though, bear in mind that generally 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 STG has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of debt relative to its equity. STG currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of STG 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 STG, take a look at STG’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further examine:
Valuation: What is STG 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 STG 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 Sunlands Online Education Group’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
