OrthoPediatrics Corp.'s (NASDAQ:KIDS): OrthoPediatrics Corp., a medical device company, designs, develops, and markets anatomically appropriate implants and devices for the treatment of children with orthopedic conditions in the United States and internationally. The US$577m market-cap company’s loss lessens since it announced a -US$12.0m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$10.8m, as it approaches breakeven. As path to profitability is the topic on KIDS’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for KIDS’s growth and when analysts expect the company to become profitable.
According to the 7 industry analysts covering KIDS, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$3.1m in 2021. So, KIDS is predicted to breakeven approximately 2 years from today. What rate will KIDS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 84%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving KIDS’s growth isn’t the focus of this broad overview, however, 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 I wrap up, there’s one issue worth mentioning. KIDS currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in KIDS’s case is 59%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of KIDS to cover in one brief article, but the key fundamentals for the company can all be found in one place – KIDS’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further examine:
- Historical Track Record: What has KIDS'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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on OrthoPediatrics’s board and the CEO’s back ground.
- 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.