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With the business potentially at an important milestone, we thought we'd take a closer look at Barnes & Noble Education, Inc.'s (NYSE:BNED) future prospects. Barnes & Noble Education, Inc. operates bookstores for college and university campuses, and K-12 institutions in the United States. The US$402m market-cap company posted a loss in its most recent financial year of US$38m and a latest trailing-twelve-month loss of US$128m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Barnes & Noble Education's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 2 of the American Specialty Retail analysts is that Barnes & Noble Education is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$8.7m in 2023. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Barnes & Noble Education's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. Barnes & Noble Education currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Barnes & Noble Education's case is 44%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of Barnes & Noble Education to cover in one brief article, but the key fundamentals for the company can all be found in one place – Barnes & Noble Education's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:
Valuation: What is Barnes & Noble Education 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 Barnes & Noble Education 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 Barnes & Noble Education’s board and the CEO’s background.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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