Analysts Are Optimistic We'll See A Profit From Telos Corporation (NASDAQ:TLS)

We feel now is a pretty good time to analyse Telos Corporation's (NASDAQ:TLS) business as it appears the company may be on the cusp of a considerable accomplishment. Telos Corporation, together with its subsidiaries, provides information technology (IT) solutions and services worldwide. The US$2.3b market-cap company posted a loss in its most recent financial year of US$6.4m and a latest trailing-twelve-month loss of US$5.7m shrinking the gap between loss and breakeven. The most pressing concern for investors is Telos' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Telos

Telos is bordering on breakeven, according to the 7 American Software analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$19m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 89% year-on-year, on average, which is extremely buoyant. 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 Telos given that this is a high-level summary, though, keep 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 would like to bring into light with Telos is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

1. Valuation: What is Telos 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 Telos 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 Telos’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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