Aquantia Corp (NYSE:AQ) Is Expected To Breakeven
Aquantia Corp’s (NYSE:AQ): Aquantia Corp., together with its subsidiaries, designs, develops, and markets advanced high-speed communication integrated circuits for Ethernet connectivity in the data center, enterprise infrastructure, and access markets worldwide. With the latest financial year loss of -US$5m and a trailing-twelve month of -US$4m, the US$426m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on AQ’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for AQ, its year of breakeven and its implied growth rate.
See our latest analysis for Aquantia
According to the industry analysts covering AQ, breakeven is near. They expect the company to post a final loss in 2018, before turning a profit of US$2m in 2019. AQ is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which AQ must grow year-on-year. It turns out an average annual growth rate of 121% 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.
I’m not going to go through company-specific developments for AQ given that this is a high-level summary, though, bear 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 I’d like to point out is that AQ has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that AQ has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of AQ to cover in one brief article, but the key fundamentals for the company can all be found in one place – AQ’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:
Valuation: What is AQ 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 AQ 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 Aquantia’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
