With the business potentially at an important milestone, we thought we'd take a closer look at CatchMark Timber Trust, Inc.'s (NYSE:CTT) future prospects. CatchMark (NYSE: CTT) seeks to deliver consistent and growing per share cash flow from disciplined acquisitions and superior management of prime timberlands located in high demand U.S. The US$585m market-cap company posted a loss in its most recent financial year of US$18m and a latest trailing-twelve-month loss of US$5.9m shrinking the gap between loss and breakeven. The most pressing concern for investors is CatchMark Timber Trust's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Consensus from 5 of the American REITs analysts is that CatchMark Timber Trust is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$15m in 2021. Therefore, the company is expected to breakeven roughly 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 -81%,
We're not going to go through company-specific developments for CatchMark Timber Trust given that this is a high-level summary, but, keep in mind that by and large periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with CatchMark Timber Trust is its 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.
There are key fundamentals of CatchMark Timber Trust which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at CatchMark Timber Trust, take a look at CatchMark Timber Trust's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:
Valuation: What is CatchMark Timber Trust 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 CatchMark Timber Trust 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 CatchMark Timber Trust’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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