Adesto Technologies Corporation's (NASDAQ:IOTS) Shift From Loss To Profit
Adesto Technologies Corporation's (NASDAQ:IOTS): Adesto Technologies Corporation provides application-specific semiconductors and embedded systems that comprise essential building blocks of Internet of Things (IoT) edge devices operating on networks worldwide. With the latest financial year loss of -US$21.4m and a trailing-twelve month of -US$26.6m, the US$253m market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on IOTS’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for IOTS, its year of breakeven and its implied growth rate.
Check out our latest analysis for Adesto Technologies
Consensus from the 7 Semiconductor analysts is IOTS is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$4.6m in 2021. So, IOTS is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, I calculated the rate at which IOTS must grow year-on-year. It turns out an average annual growth rate of 88% 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.
Underlying developments driving IOTS’s growth isn’t the focus of this broad overview, however, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. IOTS currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in IOTS’s case is 54%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of IOTS to cover in one brief article, but the key fundamentals for the company can all be found in one place – IOTS’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should look at:
Valuation: What is IOTS 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 IOTS 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 Adesto Technologies’s board and the CEO’s back ground.
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.
