Analysts Are Optimistic We'll See A Profit From 21Vianet Group, Inc. (NASDAQ:VNET)
With the business potentially at an important milestone, we thought we'd take a closer look at 21Vianet Group, Inc.'s (NASDAQ:VNET) future prospects. 21Vianet Group, Inc., an investment holding company, provides hosting and related services to Internet companies, government entities, blue-chip enterprises, and small-to mid-sized enterprises in the People’s Republic of China. With the latest financial year loss of CN¥3.2b and a trailing-twelve-month loss of CN¥570m, the US$2.9b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which 21Vianet Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for 21Vianet Group
According to the 14 industry analysts covering 21Vianet Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CN¥194m 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 26% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving 21Vianet Group's growth isn’t the focus of this broad overview, though, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with 21Vianet Group is its debt-to-equity ratio of 117%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of 21Vianet Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – 21Vianet Group's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
Valuation: What is 21Vianet Group 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 21Vianet Group 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 21Vianet Group’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. 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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