Public Companies

We Might See A Profit From Avanos Medical, Inc. (NYSE:AVNS) Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Avanos Medical, Inc.'s (NYSE:AVNS) future prospects. Avanos Medical, Inc. operates as a medical technology company that focuses on delivering medical device solutions to improve patients’ quality of life in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company’s loss has recently broadened since it announced a US$27m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$52m, moving it further away from breakeven. Many investors are wondering about the rate at which Avanos Medical will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

According to the 5 industry analysts covering Avanos Medical, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$60m in 2022. 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:AVNS Earnings Per Share Growth January 20th 2022

Underlying developments driving Avanos Medical's growth isn’t the focus of this broad overview, however, take into account 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 11% 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 Avanos Medical 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 Avanos Medical, take a look at Avanos Medical's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

  1. Valuation: What is Avanos Medical 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 Avanos Medical 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 Avanos Medical’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.

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

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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