Stock Analysis

Vista Outdoor Inc. (NYSE:VSTO) Is About To Turn The Corner

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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.

Check out our latest analysis for Vista Outdoor

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.

NYSE:VSTO Earnings Per Share Growth January 5th 2021

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.

Next Steps:

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:

  1. 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.
  2. 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.
  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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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.

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