BEST Inc. (NYSE:BEST) Is Expected To Breakeven In The Near Future

We feel now is a pretty good time to analyse BEST Inc.'s (NYSE:BEST) business as it appears the company may be on the cusp of a considerable accomplishment. BEST Inc. operates as a smart supply chain service provider in the People's Republic of China. With the latest financial year loss of CN¥202m and a trailing-twelve-month loss of CN¥1.3b, the US$998m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which BEST will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for BEST

Consensus from 5 of the American Logistics analysts is that BEST is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of CN¥483m in 2022. 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 104% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of BEST's upcoming projects, though, 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.

Before we wrap up, there’s one issue worth mentioning. BEST currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of BEST to cover in one brief article, but the key fundamentals for the company can all be found in one place – BEST's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

1. Valuation: What is BEST 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 BEST 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 BEST’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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