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Iteris, Inc. (NASDAQ:ITI) Could Be Less Than A Year Away From Profitability

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Simply Wall St
·3 min read
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We feel now is a pretty good time to analyse Iteris, Inc.'s (NASDAQ:ITI) business as it appears the company may be on the cusp of a considerable accomplishment. Iteris, Inc. provides intelligent transportation systems technology solutions in Canada and Europe. The US$236m market-cap company posted a loss in its most recent financial year of US$5.6m and a latest trailing-twelve-month loss of US$2.9m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Iteris will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Iteris

Consensus from 4 of the American Electronic analysts is that Iteris is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$12m in 2021. The company is therefore projected to breakeven around 12 months 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 40%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Iteris given that this is a high-level summary, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Iteris has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. This means that the company 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 key fundamentals of Iteris 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 Iteris, take a look at Iteris' company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

  1. Valuation: What is Iteris 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 Iteris 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 Iteris’s board and the CEO’s background.

  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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.