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WideOpenWest, Inc. (NYSE:WOW) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. WideOpenWest, Inc. provides high speed data, cable television, and digital telephony services to residential and business services customers in the United States. With the latest financial year loss of US$69m and a trailing-twelve-month loss of US$40m, the US$1.6b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which WideOpenWest will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 9 industry analysts covering WideOpenWest, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$29m 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 36%, which is rather optimistic! 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 WideOpenWest's upcoming projects, though, bear in mind that generally 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. WideOpenWest currently has a debt-to-equity ratio of 124%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on WideOpenWest, so if you are interested in understanding the company at a deeper level, take a look at WideOpenWest's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is WideOpenWest 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 WideOpenWest 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 WideOpenWest’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.