Endo International plc's (NASDAQ:ENDP): Endo International plc manufactures and sells generic and branded pharmaceuticals in the United States, Canada, and internationally. The US$775m market-cap company’s loss lessens since it announced a -US$961.8m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$522.2m, as it approaches breakeven. Many investors are wondering the rate at which ENDP will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for ENDP, its year of breakeven and its implied growth rate.
According to the 13 industry analysts covering ENDP, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$19m in 2020. So, ENDP is predicted to breakeven approximately a few months from now. How fast will ENDP have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 35% year-on-year, on average, which is extremely buoyant. 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, I won’t go into details of ENDP’s upcoming projects, though, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one issue worth mentioning. ENDP currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
There are key fundamentals of ENDP which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ENDP, take a look at ENDP’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further research:
- Valuation: What is ENDP 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 ENDP 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 Endo International’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.
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