We feel now is a pretty good time to analyse Vertex, Inc.'s (NASDAQ:VERX) business as it appears the company may be on the cusp of a considerable accomplishment. Vertex, Inc. provides tax technology solutions for retail, communication, leasing, retail trade, wholesale trade, technology, and manufacturing industries in the United States and internationally. The US$4.1b market-cap company posted a loss in its most recent financial year of US$12m and a latest trailing-twelve-month loss of US$34m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Vertex's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 11 industry analysts covering Vertex, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$3.2m in 2024. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 123%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won't go into details of Vertex's upcoming projects, though, keep in mind 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 prudently, with debt making up 22% 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:
This article is not intended to be a comprehensive analysis on Vertex, so if you are interested in understanding the company at a deeper level, take a look at Vertex's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:
- Valuation: What is Vertex 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 Vertex 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 Vertex'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.
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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.