We feel now is a pretty good time to analyse CarParts.com, Inc.'s (NASDAQ:PRTS) business as it appears the company may be on the cusp of a considerable accomplishment. CarParts.com, Inc., together with its subsidiaries, operates as an online provider of aftermarket auto parts and accessories in the United States and the Philippines. The US$623m market-cap company announced a latest loss of US$1.6m on 02 January 2021 for its most recent financial year result. As path to profitability is the topic on CarParts.com's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 4 industry analysts covering CarParts.com, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$12m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 65% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving CarParts.com's growth isn’t the focus of this broad overview, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that CarParts.com has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of CarParts.com to cover in one brief article, but the key fundamentals for the company can all be found in one place – CarParts.com's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:
- Valuation: What is CarParts.com 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 CarParts.com is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on CarParts.com’s board and the CEO’s background.
- 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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What are the risks and opportunities for CarParts.com?
Trading at 76.2% below our estimate of its fair value
Earnings are forecast to grow 54.48% per year
Became profitable this year
Shareholders have been diluted in the past year
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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