Vasta Platform Limited (NASDAQ:VSTA) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse Vasta Platform Limited's (NASDAQ:VSTA) business as it appears the company may be on the cusp of a considerable accomplishment. Vasta Platform Limited, an education company, provides educational and digital solutions to private schools operating in the K-12 educational sector in Brazil. The US$937m market-cap company’s loss lessened since it announced a R$61m loss in the full financial year, compared to the latest trailing-twelve-month loss of R$28m, as it approaches breakeven. Many investors are wondering about the rate at which Vasta Platform will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Vasta Platform

Consensus from 6 of the American Consumer Services analysts is that Vasta Platform is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of R$204m in 2021. Therefore, the company is expected to breakeven roughly a year 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 56% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Vasta Platform's growth isn’t the focus of this broad overview, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 18% 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:

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

1. Valuation: What is Vasta Platform 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 Vasta Platform 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 Vasta Platform’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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