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. On 31 December 2018, the US$3.2b market-cap posted a loss of -US$33.8m for its most recent financial year. 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.
According to the 10 industry analysts covering CSOD, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit 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 91%, which is extremely buoyant. If this rate turns out to be too aggressive, CSOD may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for CSOD given that this is a high-level summary, however, take into account 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. CSOD currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is 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 in investing in the loss-making company.
There are too many aspects of CSOD to cover in one brief article, but the key fundamentals for the company can all be found in one place – CSOD’s company page on Simply Wall St. I’ve also put together a list of important factors you should further research:
- 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.
- 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.
- 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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