When Will Pivotal Systems Corporation (ASX:PVS) Become Profitable?

  • In Business
  • 2021-09-27 04:58:51Z
  • By Simply Wall St.

With the business potentially at an important milestone, we thought we'd take a closer look at Pivotal Systems Corporation's (ASX:PVS) future prospects. Pivotal Systems Corporation engages in the design, development, manufacture, and sale of gas flow and flow ratio controllers for the semiconductor industry in Asia and North America. The AU$154m market-cap company posted a loss in its most recent financial year of US$9.1m and a latest trailing-twelve-month loss of US$5.6m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Pivotal Systems 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.

See our latest analysis for Pivotal Systems

According to the 2 industry analysts covering Pivotal Systems, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$1.9m in 2023. The company is therefore projected to breakeven around 2 years from today. 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 105% is expected, 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 Pivotal Systems given that this is a high-level summary, though, keep in mind that by and large 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 4.4% 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.

Next Steps:

There are key fundamentals of Pivotal Systems which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Pivotal Systems, take a look at Pivotal Systems' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

  1. Valuation: What is Pivotal Systems 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 Pivotal Systems 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 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.


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