When Will Endo International plc (NASDAQ:ENDP) Turn A Profit?

Endo International plc’s (NASDAQ:ENDP): Endo International plc develops, manufactures, and distributes pharmaceutical products and devices worldwide. With the latest financial year loss of -US$3.22B and a trailing-twelve month of -US$4.29B, the US$1.53B market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on ENDP’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for ENDP.

Check out our latest analysis for Endo International

Expectation from analysts is ENDP is on the verge of breakeven. They expect the company to post a final loss in 2015, before turning a profit of US$83.64M in 2016. Therefore, ENDP is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which ENDP must grow year-on-year. It turns out an average annual growth rate of 46.78% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, ENDP may become profitable much later than analysts predict.

NasdaqGS:ENDP Past Future Earnings Feb 27th 18
NasdaqGS:ENDP Past Future Earnings Feb 27th 18

Underlying developments driving ENDP’s growth isn’t the focus of this broad overview, but, keep in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I would like to bring into light with ENDP is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and ENDP has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of ENDP which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ENDP, take a look at ENDP’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:

  1. Valuation: What is ENDP 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 ENDP 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 Endo International’s board and the CEO’s back ground.
  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.