Breakeven Is Near for Entercom Communications Corp. (NYSE:ETM)

Entercom Communications Corp. (NYSE:ETM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Entercom Communications Corp., a media and entertainment company, engages in the radio broadcasting business in the United States. On 31 December 2020, the US$739m market-cap company posted a loss of US$242m for its most recent financial year. As path to profitability is the topic on Entercom Communications' 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 Entercom Communications

Consensus from 3 of the American Media analysts is that Entercom Communications is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$52m in 2021. The company is therefore projected to breakeven around a year 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 signals high confidence from analysts. 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 Entercom Communications given that this is a high-level summary, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Entercom Communications currently has a debt-to-equity ratio of over 2x. 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:

There are key fundamentals of Entercom Communications 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 Entercom Communications, take a look at Entercom Communications' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

1. Valuation: What is Entercom Communications 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 Entercom Communications 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 Entercom Communications’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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