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When Can We Expect A Profit From Accuray Incorporated (NASDAQ:ARAY)?

Simply Wall St

Accuray Incorporated's (NASDAQ:ARAY): Accuray Incorporated designs, develops, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the body. With the latest financial year loss of -US$16.4m and a trailing-twelve month of -US$1.2m, the US$268m market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is ARAY’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for ARAY’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Accuray

Consensus from the 5 Medical Equipment analysts is ARAY is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$7.8m in 2022. ARAY is therefore projected to breakeven around 2 years from now. How fast will ARAY have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 53% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, ARAY may become profitable much later than analysts predict.

NasdaqGS:ARAY Past and Future Earnings, March 1st 2020

Underlying developments driving ARAY’s growth isn’t the focus of this broad overview, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with ARAY is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and ARAY has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of ARAY to cover in one brief article, but the key fundamentals for the company can all be found in one place – ARAY’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:

  1. Valuation: What is ARAY 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 ARAY 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 Accuray’s board and the CEO’s back ground.
  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.