SiTime Corporation (NASDAQ:SITM) Could Be Less Than A Year Away From Profitability
We feel now is a pretty good time to analyse SiTime Corporation's (NASDAQ:SITM) business as it appears the company may be on the cusp of a considerable accomplishment. SiTime Corporation provides silicon timing systems in Taiwan, Hong Kong, the United States, and internationally. The US$3.7b market-cap company’s loss lessened since it announced a US$9.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$218k, as it approaches breakeven. As path to profitability is the topic on SiTime's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for SiTime
According to the 5 industry analysts covering SiTime, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$18m in 2021. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 118%, 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 SiTime's upcoming projects, but, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. SiTime currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of 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 SiTime to cover in one brief article, but the key fundamentals for the company can all be found in one place – SiTime's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Valuation: What is SiTime 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 SiTime 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 SiTime’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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