We feel now is a pretty good time to analyse Cluey Ltd's (ASX:CLU) business as it appears the company may be on the cusp of a considerable accomplishment. Cluey Ltd, an education technology company, provides online tutoring and educational support services to school students in Australia. The AU$118m market-cap company announced a latest loss of AU$20m on 30 June 2021 for its most recent financial year result. As path to profitability is the topic on Cluey'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.
According to the 2 industry analysts covering Cluey, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$400k in 2024. So, the company is predicted to breakeven approximately 3 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 70%, which is extremely buoyant. 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 Cluey's upcoming projects, but, take into account that typically 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. Cluey currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on Cluey, so if you are interested in understanding the company at a deeper level, take a look at Cluey's company page on Simply Wall St. We've also put together a list of important aspects you should further research:
Valuation: What is Cluey 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 Cluey 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 Cluey’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. 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.
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