Analysts Expect Breakeven For Star Equity Holdings, Inc. (NASDAQ:STRR) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at Star Equity Holdings, Inc.'s (NASDAQ:STRR) future prospects. Star Equity Holdings, Inc. provides healthcare solutions in the United States and internationally. With the latest financial year loss of US$5.5m and a trailing-twelve-month loss of US$8.2m, the US$18m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Star Equity Holdings 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 Star Equity Holdings

Consensus from 2 of the American Healthcare analysts is that Star Equity Holdings is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$1.4m in 2022. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 101% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Star Equity Holdings' growth isn’t the focus of this broad overview, however, keep in mind that generally 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. Star Equity Holdings currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Star Equity Holdings' case is 58%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Star Equity Holdings, so if you are interested in understanding the company at a deeper level, take a look at Star Equity Holdings' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

1. Valuation: What is Star Equity Holdings 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 Star Equity Holdings 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 Star Equity Holdings’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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