We feel now is a pretty good time to analyse Wayfair Inc.'s (NYSE:W) business as it appears the company may be on the cusp of a considerable accomplishment. Wayfair Inc. engages in the e-commerce business in the United States and internationally. The US$32b market-cap company posted a loss in its most recent financial year of US$984.6m and a latest trailing-twelve-month loss of US$614.2m shrinking the gap between loss and breakeven. The most pressing concern for investors is Wayfair's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 32 of the American Online Retail analysts is that Wayfair is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$32m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 61%, which is rather optimistic! 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 Wayfair's upcoming projects, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Wayfair is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
There are too many aspects of Wayfair to cover in one brief article, but the key fundamentals for the company can all be found in one place – Wayfair's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:
- Valuation: What is Wayfair 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 Wayfair 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 Wayfair’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.
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.
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