Tuesday Morning Corporation (NASDAQ:TUEM) Could Be Less Than A Year Away From Profitability

By
Simply Wall St
Published
May 27, 2021
NasdaqCM:TUEM
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Tuesday Morning Corporation's (NASDAQ:TUEM) future prospects. Tuesday Morning Corporation operates as an off-price retailer in the United States. With the latest financial year loss of US$166m and a trailing-twelve-month loss of US$115m, the US$346m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Tuesday Morning'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.

Check out our latest analysis for Tuesday Morning

Tuesday Morning is bordering on breakeven, according to some American Multiline Retail analysts. They expect the company to post a final loss in 2020, before turning a profit of US$26m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 158%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqCM:TUEM Earnings Per Share Growth May 27th 2021

Underlying developments driving Tuesday Morning's growth isn’t the focus of this broad overview, but, bear in mind that typically 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 The company has managed its capital prudently, with debt making up 29% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Tuesday Morning to cover in one brief article, but the key fundamentals for the company can all be found in one place – Tuesday Morning's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

  1. Historical Track Record: What has Tuesday Morning'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 Tuesday Morning'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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