Vista Outdoor Inc. (NYSE:VSTO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Vista Outdoor Inc. designs, manufactures, and markets various consumer products in the outdoor sports and recreation markets in the United States and internationally. The US$1.4b market-cap company’s loss lessened since it announced a US$155m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$6.4m, as it approaches breakeven. The most pressing concern for investors is Vista Outdoor's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 7 of the American Leisure analysts is that Vista Outdoor is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$189m in 2021. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 12% is expected, which is relatively reasonable. However, if this rate turns out to be too buoyant, the company may become profitable later than analysts predict.
We're not going to go through company-specific developments for Vista Outdoor given that this is a high-level summary, though, take into account 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. Vista Outdoor currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Vista Outdoor's case is 60%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of Vista Outdoor which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Vista Outdoor, take a look at Vista Outdoor's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
- Valuation: What is Vista Outdoor 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 Vista Outdoor 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 Vista Outdoor’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.
If you decide to trade Vista Outdoor, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
Valuation is complex, but we're helping make it simple.
Find out whether Vista Outdoor is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.