NFON AG's (ETR:NFN): NFON AG provides cloud private branch exchange (PBX) services in Germany, Austria, Italy, the United Kingdom, and Spain. The company’s loss has recently broadened since it announced a -€8.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of -€9.4m, moving it further away from breakeven. The most pressing concern for investors is NFN’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NFN, its year of breakeven and its implied growth rate.
NFN is bordering on breakeven, according to the 5 Telecom analysts. They expect the company to post a final loss in 2021, before turning a profit of €1.3m in 2022. Therefore, NFN is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, I calculated the rate at which NFN must grow year-on-year. It turns out an average annual growth rate of 66% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, NFN may become profitable much later than analysts predict.
Underlying developments driving NFN’s growth isn’t the focus of this broad overview, however, take into account 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’d like to point out is that NFN has managed its capital judiciously, with debt making up 36% of equity. This means that NFN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of NFN 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 NFN, take a look at NFN’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should look at:
- Valuation: What is NFN 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 NFN 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 NFON’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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