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With the business potentially at an important milestone, we thought we'd take a closer look at Distribution Finance Capital Holdings plc's (LON:DFCH) future prospects. Distribution Finance Capital Holdings plc, an investment holding company, operates as a personal savings and commercial lending bank in the United Kingdom. The UK£65m market-cap company’s loss lessened since it announced a UK£3.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£1.3m, as it approaches breakeven. The most pressing concern for investors is Distribution Finance Capital Holdings' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Distribution Finance Capital Holdings
Consensus from 2 of the British Diversified Financial analysts is that Distribution Finance Capital Holdings is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of UK£4.8m in 2023. So, the company is predicted to breakeven approximately 12 months 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 83%, which is rather optimistic! 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 Distribution Finance Capital Holdings' upcoming projects, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.06% 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 Distribution Finance Capital Holdings, so if you are interested in understanding the company at a deeper level, take a look at Distribution Finance Capital Holdings' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:
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Historical Track Record: What has Distribution Finance Capital Holdings' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Distribution Finance Capital Holdings' board and the CEO’s background.
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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.