Breakeven Is Near for Pivotal Systems Corporation (ASX:PVS)

We feel now is a pretty good time to analyse Pivotal Systems Corporation's (ASX:PVS) business as it appears the company may be on the cusp of a considerable accomplishment. Pivotal Systems Corporation designs, develops, manufactures, and sells gas flow controllers for the semiconductor industry in Asia and North America. The AU$118m market-cap company posted a loss in its most recent financial year of US$10.0m and a latest trailing-twelve-month loss of US$9.8m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Pivotal Systems will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Pivotal Systems

Pivotal Systems is bordering on breakeven, according to the 2 Australian Semiconductor analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$250k in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 106% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Pivotal Systems' growth isn’t the focus of this broad overview, though, 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.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 11% 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 too many aspects of Pivotal Systems to cover in one brief article, but the key fundamentals for the company can all be found in one place – Pivotal Systems' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Pivotal Systems 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 Pivotal Systems 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 Pivotal Systems’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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