Analysts Expect Breakeven For Invacare Corporation (NYSE:IVC) Before Long

By
Simply Wall St
Published
September 09, 2021
NYSE:IVC
Source: Shutterstock

Invacare Corporation (NYSE:IVC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Invacare Corporation, together with its subsidiaries, designs, manufactures, distributes, and exports medical equipment for use in home health care, retail, and extended care markets worldwide. The company’s loss has recently broadened since it announced a US$28m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$37m, moving it further away from breakeven. As path to profitability is the topic on Invacare's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Invacare

Consensus from 4 of the American Medical Equipment analysts is that Invacare is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$2.5m in 2022. The company is therefore projected to breakeven just over a year from today. 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 111% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NYSE:IVC Earnings Per Share Growth September 10th 2021

Given this is a high-level overview, we won’t go into details of Invacare's upcoming projects, however, 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.

One thing we would like to bring into light with Invacare is its debt-to-equity ratio of 111%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Invacare 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 Invacare 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 Invacare’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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