Yahoo Finance Icahn Enterprises L.P. (NASDAQ:IEP) Has Found A Path To Profitability
Icahn Enterprises L.P. (NASDAQ:IEP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Icahn Enterprises L.P., through its subsidiaries, operates in investment, energy, automotive, food packaging, real estate, home fashion, and pharma businesses in the United States and Internationally. The US$18b market-cap company’s loss lessened since it announced a US$604m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$413m, as it approaches breakeven. The most pressing concern for investors is Icahn Enterprises' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Icahn Enterprises
Expectations from some of the American Industrials analysts is that Icahn Enterprises is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$123m in 2022. The company is therefore projected to breakeven around 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 159%, 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.
Underlying developments driving Icahn Enterprises' growth isn’t the focus of this broad overview, though, take into account 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. Icahn Enterprises currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Icahn Enterprises' case is 72%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Icahn Enterprises, so if you are interested in understanding the company at a deeper level, take a look at Icahn Enterprises' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:
Valuation: What is Icahn Enterprises 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 Icahn Enterprises is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Icahn Enterprises’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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