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Vertiv Holdings Co. (NYSE:VRT): Is Breakeven Near?

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Simply Wall St
·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Vertiv Holdings Co.'s (NYSE:VRT) future prospects. Vertiv Holdings Co, together with its subsidiaries, provides mission-critical infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The US$6.2b market-cap company posted a loss in its most recent financial year of US$141m and a latest trailing-twelve-month loss of US$292m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Vertiv Holdings' 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.

Check out our latest analysis for Vertiv Holdings

Consensus from 7 of the American Electrical analysts is that Vertiv Holdings is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$277m in 2021. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 52% is expected, which is extremely buoyant. 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

Given this is a high-level overview, we won’t go into details of Vertiv Holdings' upcoming projects, but, take into account 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. Vertiv Holdings currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Vertiv Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Vertiv Holdings' company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

  1. Valuation: What is Vertiv Holdings 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 Vertiv Holdings 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 Vertiv Holdings’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@simplywallst.com.