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Liberty Latin America Ltd. (NASDAQ:LILA): When Will It Breakeven?

Simply Wall St

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Liberty Latin America Ltd.'s (NASDAQ:LILA): Liberty Latin America Ltd., together with its subsidiaries, provides fixed, mobile, and subsea telecommunications services. The US$3.3b market-cap posted a loss in its most recent financial year of -US$345.2m and a latest trailing-twelve-month loss of -US$342.4m shrinking the gap between loss and breakeven. As path to profitability is the topic on LILA’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for LILA.

Check out our latest analysis for Liberty Latin America

According to the 6 industry analysts covering LILA, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$102m in 2020. So, LILA is predicted to breakeven approximately a couple of months from now! What rate will LILA have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 91%, which signals high confidence from analysts. If this rate turns out to be too aggressive, LILA may become profitable much later than analysts predict.

NasdaqGS:LILA Past and Future Earnings, June 26th 2019

Given this is a high-level overview, I won’t go into details of LILA’s upcoming projects, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. LILA currently has a debt-to-equity ratio of 166%. Typically, debt shouldn’t exceed 40% of your equity, and LILA has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of LILA 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 LILA, take a look at LILA’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further research:

  1. Valuation: What is LILA 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 LILA 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 Liberty Latin America’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.

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.

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. Thank you for reading.