Loss-Making PowerSchool Holdings, Inc. (NYSE:PWSC) Expected To Breakeven In The Medium-Term
We feel now is a pretty good time to analyse PowerSchool Holdings, Inc.'s (NYSE:PWSC) business as it appears the company may be on the cusp of a considerable accomplishment. PowerSchool Holdings, Inc., together with its subsidiaries, offers cloud-based software to the K-12 education market. The US$3.6b market-cap company’s loss lessened since it announced a US$21m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$21m, as it approaches breakeven. Many investors are wondering about the rate at which PowerSchool Holdings will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for PowerSchool Holdings
Consensus from 13 of the American Software analysts is that PowerSchool Holdings is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$1.0m in 2024. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 121% year-on-year, on average, which signals high confidence from analysts. 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, we won’t go into details of PowerSchool Holdings' upcoming projects, though, 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.
One thing we would like to bring into light with PowerSchool Holdings is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in PowerSchool Holdings' case is 42%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of PowerSchool Holdings 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 PowerSchool Holdings, take a look at PowerSchool Holdings' company page on Simply Wall St. We've also put together a list of essential factors you should look at:
Valuation: What is PowerSchool Holdings 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 PowerSchool Holdings 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 PowerSchool Holdings’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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