Liberty Latin America Ltd.'s (NASDAQ:LILA) Has Found A Path To Profitability

We feel now is a pretty good time to analyse Liberty Latin America Ltd.'s (NASDAQ:LILA) business as it appears the company may be on the cusp of a considerable accomplishment. Liberty Latin America Ltd., together with its subsidiaries, provides fixed, mobile, and subsea telecommunications services. The US$3.4b market-cap company’s loss lessened since it announced a US$687m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$419m, as it approaches breakeven. Many investors are wondering about the rate at which Liberty Latin America will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Liberty Latin America

Liberty Latin America is bordering on breakeven, according to the 5 American Telecom analysts. They expect the company to post a final loss in 2020, before turning a profit of US$80m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 86% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

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Underlying developments driving Liberty Latin America's growth isn’t the focus of this broad overview, but, keep in mind that generally 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 Liberty Latin America is its debt-to-equity ratio of over 2x. 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 in investing in the loss-making company.

Next Steps:

There are too many aspects of Liberty Latin America to cover in one brief article, but the key fundamentals for the company can all be found in one place – Liberty Latin America's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Liberty Latin America 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 Liberty Latin America 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 Liberty Latin America’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. 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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