When Will Frontier Communications Corporation (NASDAQ:FTR) Breakeven?
Frontier Communications Corporation’s (NASDAQ:FTR): Frontier Communications Corporation provides communications services to consumer, commercial, and wholesale customers in the United States. With the latest financial year loss of -US$2.0b and a trailing-twelve month of -US$1.6b, the US$279m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on FTR’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for FTR, its year of breakeven and its implied growth rate.
View our latest analysis for Frontier Communications
According to the 12 industry analysts covering FTR, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$141m in 2021. So, FTR is predicted to breakeven approximately 3 years from today. In order to meet this breakeven date, I calculated the rate at which FTR must grow year-on-year. It turns out an average annual growth rate of 42% is expected, which is extremely buoyant. 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 FTR given that this is a high-level summary, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with FTR is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and FTR has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of FTR to cover in one brief article, but the key fundamentals for the company can all be found in one place – FTR’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:
Valuation: What is FTR 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 FTR 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 Frontier Communications’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.
