Vasta Platform Limited (NASDAQ:VSTA) On The Verge Of Breaking Even

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$1.3b 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?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Vasta Platform

Consensus from 5 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 2019, before turning a profit of R$67m in 2020. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 63%, 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 Vasta Platform's growth isn’t the focus of this broad overview, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, 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 key factors you should further examine:

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.

When trading Vasta Platform or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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@simplywallst.com.