Tactile Systems Technology: Revenue Grows, But Is Profitability Sustainable?
Tactile Systems Technology (NASDAQ: TCMD) has reported its first quarter 2024 financial results, providing key data on revenue and net loss. Although the company saw revenue of US$61.1m, a 3.8% increase from the first quarter of 2023, they also reported a net loss of US$2.21m, which is a 17% increase from the previous year. This resulted in a loss per share of US$0.093, compared to US$0.089 in the first quarter of 2023.
Despite the mixed financial results, Tactile Systems Technology exceeded revenue expectations by 3.1%. However, they fell short on earnings per share (EPS) estimates by 16%. Looking forward, the company is forecasting a 12% annual revenue growth rate over the next three years, outperforming the Medical Equipment industry in the US, which is expected to grow at an annual rate of 8.1%.
The American Medical Equipment industry has shown positive performance with Tactile Systems Technology’s shares rising by 4.9% in the past week. However, investors should be aware of potential risks associated with investing in this company. Two warning signs have been identified that investors should keep in mind when considering investing in Tactile Systems Technology stock:
Firstly, despite reporting revenue growth over the past year, Tactile Systems Technology’s net loss has widened significantly since last year’s first quarter. This may indicate that there are underlying issues within the company’s operations that need to be addressed before they can achieve sustainable profitability. Secondly, although Tactile Systems Technology’s projected growth rate is higher than that of its industry peers over the next three years, it still falls short of achieving double-digit growth rates seen in other sectors such as technology and consumer goods industries.
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It is essential to note that Simply Wall St provides unbiased insights based on historical data and analyst forecasts but does not hold positions in any stocks mentioned and should not be considered financial advice.
Overall, while Tactile Systems Technology has shown some promising signs of growth over the past year and projecting higher growth rates than their industry peers over the next three years; investors should carefully consider these warning signs before investing their money into this stock.
