Team, Inc.’s (NYSE:TISI): Team, Inc. provides specialty industrial services in the United States, Canada, Europe, and internationally. On 31 December 2018, the US$586m market-cap posted a loss of -US$64.8m for its most recent financial year. The most pressing concern for investors is TISI’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for TISI.
TISI is bordering on breakeven, according to the 3 Commercial Services analysts. They expect the company to post a final loss in 2019, before turning a profit of US$35m in 2020. Therefore, TISI is expected to breakeven roughly a few months from now. What rate will TISI have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 144%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving TISI’s growth isn’t the focus of this broad overview, though, keep in mind that generally 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. TISI currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in TISI’s case is 78%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of TISI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at TISI, take a look at TISI’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
- Valuation: What is TISI 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 TISI 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 Team’s board and the CEO’s back ground.
- 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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