Yahoo Finance Breakeven On The Horizon For Iridium Communications Inc. (NASDAQ:IRDM)
We feel now is a pretty good time to analyse Iridium Communications Inc.'s (NASDAQ:IRDM) business as it appears the company may be on the cusp of a considerable accomplishment. Iridium Communications Inc. provides mobile voice and data communications services and product to businesses, the United States and foreign governments, non-governmental organizations, and consumers worldwide. The US$6.1b market-cap company’s loss lessened since it announced a US$56m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$13m, as it approaches breakeven. Many investors are wondering about the rate at which Iridium Communications 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 Iridium Communications
Consensus from 7 of the American Telecom analysts is that Iridium Communications is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$3.3m in 2022. The company is therefore projected 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 123% is expected, which is rather optimistic! 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 Iridium Communications given that this is a high-level summary, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Iridium Communications is its debt-to-equity ratio of 123%. 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.
Next Steps:
There are key fundamentals of Iridium Communications 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 Iridium Communications, take a look at Iridium Communications' company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is Iridium Communications 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 Iridium Communications 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 Iridium Communications’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. 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.
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