Accuray Incorporated (NASDAQ:ARAY): When Will It Breakeven?

We feel now is a pretty good time to analyse Accuray Incorporated's (NASDAQ:ARAY) business as it appears the company may be on the cusp of a considerable accomplishment. Accuray Incorporated designs, develops, manufactures, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the United States, Canada, Latin America, Asia, Australia, New Zealand, Europe, the Middle East, India, Africa, Japan, and China. The US$162m market-cap company posted a loss in its most recent financial year of US$16m and a latest trailing-twelve-month loss of US$4.4m shrinking the gap between loss and breakeven. The most pressing concern for investors is Accuray's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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According to the 4 industry analysts covering Accuray, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$13m in 2026. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 110% is expected, 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 Accuray's growth isn’t the focus of this broad overview, 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.

See our latest analysis for Accuray

Before we wrap up, there’s one issue worth mentioning. Accuray currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Accuray to cover in one brief article, but the key fundamentals for the company can all be found in one place – Accuray's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. Historical Track Record: What has Accuray's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Accuray'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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.