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Loss-Making Audacy, Inc. (NYSE:AUD) Set To Breakeven

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·3 min read
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Audacy, Inc. (NYSE:AUD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Audacy, Inc., a multi-platform audio content and entertainment company, engages in the radio broadcasting business in the United States. With the latest financial year loss of US$242m and a trailing-twelve-month loss of US$199m, the US$500m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Audacy's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Audacy

Audacy is bordering on breakeven, according to the 5 American Media analysts. They expect the company to post a final loss in 2020, before turning a profit of US$22m in 2021. The company is therefore projected to breakeven around a year 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 43%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for Audacy given that this is a high-level summary, but, 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.

Before we wrap up, there’s one issue worth mentioning. Audacy currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 key fundamentals of Audacy 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 Audacy, take a look at Audacy's company page on Simply Wall St. We've also put together a list of important aspects you should further research:

  1. Valuation: What is Audacy 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 Audacy 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 Audacy’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.