Analysts Expect Rackspace Technology, Inc. (NASDAQ:RXT) To Breakeven Soon
With the business potentially at an important milestone, we thought we'd take a closer look at Rackspace Technology, Inc.'s (NASDAQ:RXT) future prospects. Rackspace Technology, Inc. operates as a multi cloud technology services company worldwide. The company’s loss has recently broadened since it announced a US$102m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$229m, moving it further away from breakeven. As path to profitability is the topic on Rackspace Technology's 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 Rackspace Technology
Rackspace Technology is bordering on breakeven, according to the 7 American IT analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$911k in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 103% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Rackspace Technology's upcoming projects, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Rackspace Technology currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 Rackspace Technology to cover in one brief article, but the key fundamentals for the company can all be found in one place – Rackspace Technology's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:
Valuation: What is Rackspace Technology 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 Rackspace Technology 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 Rackspace Technology’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.
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.
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