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We Might See A Profit From PetIQ, Inc. (NASDAQ:PETQ) Soon

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·3 min read
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PetIQ, Inc. (NASDAQ:PETQ) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. PetIQ, Inc. operates as a pet medication and wellness company. The US$755m market-cap company’s loss lessened since it announced a US$77m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$5.5m, as it approaches breakeven. As path to profitability is the topic on PetIQ's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for PetIQ

PetIQ is bordering on breakeven, according to the 7 American Healthcare analysts. They expect the company to post a final loss in 2020, before turning a profit of US$14m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 66% is expected, which signals high confidence from analysts. 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 PetIQ given that this is a high-level summary, however, keep in mind that typically 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 PetIQ is its debt-to-equity ratio of 169%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. 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 PetIQ 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 PetIQ, take a look at PetIQ's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

  1. Historical Track Record: What has PetIQ'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 PetIQ'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.