Market Sentiment Around Loss-Making Pivotal Systems Corporation (ASX:PVS)

  • In Business
  • 2020-07-31 23:30:18Z
  • By Simply Wall St.
Market Sentiment Around Loss-Making Pivotal Systems Corporation (ASX:PVS)
Market Sentiment Around Loss-Making Pivotal Systems Corporation (ASX:PVS)  

Pivotal Systems Corporation's (ASX:PVS): Pivotal Systems Corporation designs, develops, manufactures, and sells gas flow controllers for the semiconductor industry in Asia and North America. On 31 December 2019, the AU$139m market-cap posted a loss of US$10.0m for its most recent financial year. The most pressing concern for investors is PVS's path to profitability - when will it breakeven? I've put together a brief outline of industry analyst expectations for PVS, its year of breakeven and its implied growth rate.

Check out our latest analysis for Pivotal Systems

According to the 2 industry analysts covering PVS, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$3.1m in 2021. PVS is therefore projected to breakeven around a few months from now. What rate will PVS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 102%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving PVS's growth isn't the focus of this broad overview, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there's one aspect worth mentioning. PVS has managed its capital prudently, with debt making up 12% of equity. This means that PVS has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on PVS, so if you are interested in understanding the company at a deeper level, take a look at PVS's company page on Simply Wall St. I've also put together a list of important factors you should further examine:

  1. Valuation: What is PVS 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 PVS 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 Pivotal Systems's board and the CEO's back ground.

  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.

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