Analysts Are Optimistic We'll See A Profit From Five Star Senior Living Inc. (NASDAQ:FVE)

Five Star Senior Living Inc. (NASDAQ:FVE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Five Star Senior Living Inc. operates and manages senior living communities in the United States. On 31 December 2020, the US$215m market-cap company posted a loss of US$7.6m for its most recent financial year. Many investors are wondering about the rate at which Five Star Senior Living 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 Five Star Senior Living

Five Star Senior Living is bordering on breakeven, according to some American Healthcare analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$8.0m in 2021. Therefore, the company is expected to breakeven roughly 12 months 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 67% is expected, 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 Five Star Senior Living's growth isn’t the focus of this broad overview, but, take into account that by and large 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 3.4% 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:

There are key fundamentals of Five Star Senior Living 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 Five Star Senior Living, take a look at Five Star Senior Living's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is Five Star Senior Living 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 Five Star Senior Living 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 Five Star Senior Living’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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