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With the business potentially at an important milestone, we thought we'd take a closer look at Nido Education Limited's (ASX:NDO) future prospects. Nido Education Limited owns, operates, and manages long day early childhood education and care centers under the Nido Early School brand name in Australia. On 31 December 2023, the AU$208m market-cap company posted a loss of AU$18m for its most recent financial year. As path to profitability is the topic on Nido Education's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Nido Education
Consensus from 3 of the Australian Consumer Services analysts is that Nido Education is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$17m in 2024. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 65% is expected, 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 Nido Education's growth isn’t the focus of this broad overview, but, 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.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 26% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Nido Education which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Nido Education, take a look at Nido Education's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:
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Valuation: What is Nido 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 Nido Education is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nido Education’s board and the CEO’s background.
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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.