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We feel now is a pretty good time to analyse Nido Education Limited's (ASX:NDO) business as it appears the company may be on the cusp of a considerable accomplishment. Nido Education Limited owns, operates, and manages long day early childhood education and care centers under the Nido Early School brand name in Australia. The AU$175m market-cap company posted a loss in its most recent financial year of AU$18m and a latest trailing-twelve-month loss of AU$11m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Nido Education will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
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 2024, before turning a profit of AU$18m in 2025. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Nido Education's upcoming projects, but, bear 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 3.9% 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 compiled a list of essential factors you should further examine:
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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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.