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Analysts Expect Advantage Solutions Inc. (NASDAQ:ADV) To Breakeven Soon

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·3 min read
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We feel now is a pretty good time to analyse Advantage Solutions Inc.'s (NASDAQ:ADV) business as it appears the company may be on the cusp of a considerable accomplishment. Advantage Solutions Inc. provides outsourced solutions to consumer goods companies and retailers in North America and internationally. On 31 December 2020, the US$4.1b market-cap company posted a loss of US$162m for its most recent financial year. The most pressing concern for investors is Advantage Solutions' 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 Advantage Solutions

According to the 3 industry analysts covering Advantage Solutions, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$168m in 2021. So, the company is predicted to breakeven approximately 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 62%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

Underlying developments driving Advantage Solutions' growth isn’t the focus of this broad overview, but, keep in mind that typically 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. Advantage Solutions currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Advantage Solutions' case is 83%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Advantage Solutions 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 Advantage Solutions 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 Advantage Solutions’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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.