Vasta Platform Limited (NASDAQ:VSTA) Has Found A Path To Profitability
Vasta Platform Limited (NASDAQ:VSTA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Vasta Platform Limited, an education company, provides educational printed and digital solutions to private schools operating in the K-12 educational sector in Brazil. On 31 December 2021, the US$428m market-cap company posted a loss of R$119m for its most recent financial year. As path to profitability is the topic on Vasta Platform's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Vasta Platform
According to the 7 industry analysts covering Vasta Platform, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of R$36m in 2022. 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 133%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Vasta Platform given that this is a high-level summary, however, 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.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 20% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Vasta Platform, so if you are interested in understanding the company at a deeper level, take a look at Vasta Platform's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Vasta Platform 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 Vasta Platform 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 Vasta Platform’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.
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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.