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When Can We Expect A Profit From Invacare Corporation (NYSE:IVC)?

Simply Wall St

Invacare Corporation's (NYSE:IVC): Invacare Corporation, together with its subsidiaries, designs, manufactures, distributes, and exports medical equipment for use in home health care, retail, and extended care markets worldwide. The US$165m market-cap posted a loss in its most recent financial year of -US$43.9m and a latest trailing-twelve-month loss of -US$43.7m shrinking the gap between loss and breakeven. The most pressing concern for investors is IVC’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for IVC’s growth and when analysts expect the company to become profitable.

View our latest analysis for Invacare

According to the 5 industry analysts covering IVC, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$2.6m in 2020. IVC is therefore projected to breakeven around a few months from now. How fast will IVC have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 110% 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.

NYSE:IVC Past and Future Earnings, August 5th 2019

Given this is a high-level overview, I won’t go into details of IVC’s upcoming projects, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with IVC is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in IVC’s case is 74%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is IVC 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 IVC 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 Invacare’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.