When Will Ribbon Communications Inc. (NASDAQ:RBBN) Breakeven?

By
Simply Wall St
Published
November 16, 2020
NasdaqGS:RBBN

Ribbon Communications Inc. (NASDAQ:RBBN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ribbon Communications Inc. provides networked software solutions in the United States, Europe, the Middle East, Africa, Japan, other Asia Pacific, and internationally. The company’s loss has recently broadened since it announced a US$130m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$186m, moving it further away from breakeven. As path to profitability is the topic on Ribbon Communications' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Ribbon Communications

According to the 2 industry analysts covering Ribbon Communications, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$12m in 2021. The company is therefore projected to breakeven just over a year 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 164% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGS:RBBN Earnings Per Share Growth November 16th 2020

We're not going to go through company-specific developments for Ribbon Communications given that this is a high-level summary, though, 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. Ribbon Communications currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Ribbon Communications' case is 72%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Ribbon Communications, so if you are interested in understanding the company at a deeper level, take a look at Ribbon Communications' company page on Simply Wall St. We've also put together a list of key factors you should further research:

  1. Valuation: What is Ribbon 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 Ribbon 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 Ribbon 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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