Clavister Holding AB (publ.)’s (STO:CLAV): Clavister Holding AB (publ.), together with its subsidiaries, develops, produces, and sells network security solutions in the area of cyber security worldwide. The kr313m market-cap company announced a latest loss of -kr122.0m on 31 December 2018 for its most recent financial year result. The most pressing concern for investors is CLAV’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for CLAV’s growth and when analysts expect the company to become profitable.
Expectation from Software analysts is CLAV is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of kr6.0m in 2020. So, CLAV is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which CLAV must grow year-on-year. It turns out an average annual growth rate of 95% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, CLAV may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of CLAV’s upcoming projects, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. CLAV currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and CLAV 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.
There are key fundamentals of CLAV 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 CLAV, take a look at CLAV’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
- Historical Track Record: What has CLAV’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Clavister Holding AB (publ.)’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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