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With the business potentially at an important milestone, we thought we'd take a closer look at Petco Health and Wellness Company, Inc.'s (NASDAQ:WOOF) future prospects. Petco Health and Wellness Company, Inc. operates as a retailer of premium pet consumables, supplies, and companion animals and services. The US$5.8b market-cap company announced a latest loss of US$26m on 30 January 2021 for its most recent financial year result. The most pressing concern for investors is Petco Health and Wellness Company's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 8 industry analysts covering Petco Health and Wellness Company, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$131m in 2022. So, the company is predicted to breakeven approximately 12 months 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 36% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Petco Health and Wellness Company's growth isn’t the focus of this broad overview, but, keep in mind that by and large 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 issue worth mentioning. Petco Health and Wellness Company currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Petco Health and Wellness Company's case is 83%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Petco Health and Wellness Company, so if you are interested in understanding the company at a deeper level, take a look at Petco Health and Wellness Company's company page on Simply Wall St. We've also put together a list of essential factors you should look at:
Valuation: What is Petco Health and Wellness Company 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 Petco Health and Wellness Company 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 Petco Health and Wellness Company’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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