Casella Waste Systems Inc’s (NASDAQ:CWST) Path To Profitability

Casella Waste Systems Inc’s (NASDAQ:CWST): Casella Waste Systems, Inc., together with its subsidiaries, operates as a vertically-integrated solid waste services company in the northeastern United States. The US$1.05b market-cap posted a loss in its most recent financial year of -US$21.80m and a latest trailing-twelve-month loss of -US$25.48m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on CWST’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for CWST.

See our latest analysis for Casella Waste Systems

CWST is bordering on breakeven, according to Commercial Services analysts. They expect the company to post a final loss in 2017, before turning a profit of US$25.84m in 2018. Therefore, CWST is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which CWST must grow year-on-year. It turns out an average annual growth rate of 59.50% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGS:CWST Past Future Earnings June 14th 18
NasdaqGS:CWST Past Future Earnings June 14th 18

Given this is a high-level overview, I won’t go into details of CWST’s upcoming projects, but, keep 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 I wrap up, there’s one issue worth mentioning. CWST currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on CWST, so if you are interested in understanding the company at a deeper level, take a look at CWST’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further research:

  1. Valuation: What is CWST 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 CWST 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 Casella Waste Systems’s board and the CEO’s back ground.
  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.