Franklin Covey Co.’s (NYSE:FC) Shift From Loss To Profit

Franklin Covey Co.’s (NYSE:FC) Shift From Loss To Profit


We feel now is a pretty good time to analyse Franklin Covey Co.’s (NYSE:FC) business as it appears the company may be on the cusp of a considerable accomplishment. Franklin Covey Co. provides training and consulting services in the areas of leadership, execution, productivity, trust, sales performance, customer loyalty, and educational improvement for organizations and individuals worldwide. The US$252m market-cap company posted a loss in its most recent financial year of US$1.0m and a latest trailing-twelve-month loss of US$4.5m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Franklin Covey’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 Franklin Covey

Franklin Covey is bordering on breakeven, according to the 4 American Professional Services analysts. They expect the company to post a final loss in 2021, before turning a profit of US$4.3m in 2022. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 130% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:FC Earnings Per Share Growth October 10th 2020

Underlying developments driving Franklin Covey’s growth isn’t the focus of this broad overview, but, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Franklin Covey currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Franklin Covey’s case is 63%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Franklin Covey to cover in one brief article, but the key fundamentals for the company can all be found in one place – Franklin Covey’s company page on Simply Wall St. We’ve also put together a list of pertinent aspects you should further research:

  1. Valuation: What is Franklin Covey 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 Franklin Covey is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Franklin Covey’s board and the CEO’s background.
  3. 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. 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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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.



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2020-10-11 07:00:00

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