Trupanion, Inc.'s (NASDAQ:TRUP) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at Trupanion, Inc.'s (NASDAQ:TRUP) future prospects. Trupanion, Inc., together with its subsidiaries, provides medical insurance for cats and dogs on a monthly subscription basis in the United States, Canada, Continental Europe, and Australia. The US$1.7b market-cap company’s loss lessened since it announced a US$45m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$19m, as it approaches breakeven. As path to profitability is the topic on Trupanion'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.

See our latest analysis for Trupanion

Trupanion is bordering on breakeven, according to the 7 American Insurance analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$518k in 2025. Therefore, the company is expected to breakeven just over a year 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 72%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Trupanion given that this is a high-level summary, though, bear 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 Trupanion is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Trupanion's case is 42%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Trupanion 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 Trupanion, take a look at Trupanion's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

1. Historical Track Record: What has Trupanion'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 Trupanion'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.