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Market Sentiment Around Loss-Making Trupanion, Inc. (NASDAQ:TRUP)

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Simply Wall St
·3 min read
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Trupanion, Inc. (NASDAQ:TRUP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Trupanion, Inc., together with its subsidiaries, provides medical insurance for cats and dogs on monthly subscription basis in the United States, Canada, Puerto Rico, and Australia. The US$3.9b market-cap company announced a latest loss of US$5.8m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Trupanion'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.

See our latest analysis for Trupanion

According to the 5 industry analysts covering Trupanion, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$2.8m in 2023. The company is therefore projected to breakeven around 2 years from now. 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 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

Given this is a high-level overview, we won’t go into details of Trupanion's upcoming projects, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. Trupanion currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high 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 too many aspects of Trupanion to cover in one brief article, but the key fundamentals for the company can all be found in one place – Trupanion's company page on Simply Wall St. We've also put together a list of important factors you should further research:

  1. Historical Track Record: What has Trupanion's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Trupanion'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.