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ACV Auctions Inc. (NASDAQ:ACVA): Are Analysts Optimistic?

Simply Wall St
·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at ACV Auctions Inc.'s (NASDAQ:ACVA) future prospects. ACV Auctions Inc. operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles. With the latest financial year loss of US$78m and a trailing-twelve-month loss of US$104m, the US$1.4b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on ACV Auctions' 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 ACV Auctions

ACV Auctions is bordering on breakeven, according to the 16 American Commercial Services analysts. They expect the company to post a final loss in 2024, before turning a profit of US$25m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving ACV Auctions' growth isn’t the focus of this broad overview, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 14% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of ACV Auctions which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at ACV Auctions, take a look at ACV Auctions' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

  1. Valuation: What is ACV Auctions 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 ACV Auctions 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 ACV Auctions’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.

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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