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When Will Tandem Diabetes Care, Inc. (NASDAQ:TNDM) Turn A Profit?

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·3 min read
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We feel now is a pretty good time to analyse Tandem Diabetes Care, Inc.'s (NASDAQ:TNDM) business as it appears the company may be on the cusp of a considerable accomplishment. Tandem Diabetes Care, Inc., a medical device company, designs, develops, and commercializes various products for people with insulin-dependent diabetes in the United States. With the latest financial year loss of US$25m and a trailing-twelve-month loss of US$49m, the US$5.8b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Tandem Diabetes Care will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Tandem Diabetes Care

According to the 14 industry analysts covering Tandem Diabetes Care, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$1.5m in 2021. The company is therefore projected to breakeven just over a year 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 73%, which is rather optimistic! 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

Underlying developments driving Tandem Diabetes Care's growth isn’t the focus of this broad overview, however, keep in mind that typically 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 issue worth mentioning. Tandem Diabetes Care currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Tandem Diabetes Care's case is 61%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Tandem Diabetes Care, so if you are interested in understanding the company at a deeper level, take a look at Tandem Diabetes Care's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

  1. Valuation: What is Tandem Diabetes Care 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 Tandem Diabetes Care is currently mispriced by the market.

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