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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, designs, manufactures, and services critical digital 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$9.2b market-cap company’s loss lessened since it announced a US$327m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$87m, as it approaches breakeven. Many investors are wondering about the rate at which Vertiv Holdings Co 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.
Consensus from 8 of the American Electrical analysts is that Vertiv Holdings Co is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$265m in 2021. So, the company is predicted to breakeven approximately a year 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 52%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Vertiv Holdings Co's upcoming projects, though, bear 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. Vertiv Holdings Co currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Vertiv Holdings Co, so if you are interested in understanding the company at a deeper level, take a look at Vertiv Holdings Co's company page on Simply Wall St. We've also put together a list of essential factors you should further research:
Valuation: What is Vertiv Holdings Co 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 Co 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 Vertiv Holdings Co’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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