Invacare Corporation's (NYSE:IVC) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Invacare Corporation's (NYSE:IVC) future prospects. 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 US$306m market-cap company posted a loss in its most recent financial year of US$53m and a latest trailing-twelve-month loss of US$42m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Invacare will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Invacare

According to the 4 industry analysts covering Invacare, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$8.1m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 93%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Invacare's upcoming projects, however, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Invacare is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Invacare's case is 73%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Invacare to cover in one brief article, but the key fundamentals for the company can all be found in one place – Invacare'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 Invacare'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 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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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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