Forterra, Inc.'s (NASDAQ:FRTA): Forterra, Inc. manufactures and sells pipe and precast products the United States, Canada, and Mexico. On 31 December 2019, the US$350m market-cap posted a loss of -US$7.3m for its most recent financial year. As path to profitability is the topic on FRTA’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for FRTA’s growth and when analysts expect the company to become profitable.
See our latest analysis for Forterra
According to the 4 industry analysts covering FRTA, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$30m in 2021. So, FRTA is predicted to breakeven approximately a few months from now. What rate will FRTA have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 48%, which signals high confidence from analysts. If this rate turns out to be too aggressive, FRTA may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for FRTA given that this is a high-level summary, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with FRTA is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in FRTA’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of FRTA which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at FRTA, take a look at FRTA’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:
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Valuation: What is FRTA 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 FRTA is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Forterra’s board and the CEO’s back ground.
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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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