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MARKETS LIVE BLOG:

S&P 500, NASDAQ NOTCH BIG WINS WITH TESLA EARNINGS ON DECK

Tech-focused investors prepare for fresh wave of earnings highlighted by struggling Tesla

Custom Truck One Source, Inc. (NYSE:CTOS) On The Verge Of Breaking Even

Simply Wall St
·3 min read

We feel now is a pretty good time to analyse Custom Truck One Source, Inc.'s (NYSE:CTOS) business as it appears the company may be on the cusp of a considerable accomplishment. Custom Truck One Source, Inc. provides specialty equipment rental services to the electric utility transmission and distribution, telecommunications, rail, other infrastructure-related industries in North America. With the latest financial year loss of US$182m and a trailing-twelve-month loss of US$157m, the US$1.3b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Custom Truck One Source'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.

See our latest analysis for Custom Truck One Source

Custom Truck One Source is bordering on breakeven, according to the 6 American Trade Distributors analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$20m in 2022. Therefore, the company is expected to breakeven roughly 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 53%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Custom Truck One Source's growth isn’t the focus of this broad overview, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

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One thing we would like to bring into light with Custom Truck One Source is its debt-to-equity ratio of 190%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Custom Truck One Source, so if you are interested in understanding the company at a deeper level, take a look at Custom Truck One Source's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

  1. Valuation: What is Custom Truck One Source 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 Custom Truck One Source 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 Custom Truck One Source’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.

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