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We feel now is a pretty good time to analyse Harmoney Corp Limited's (ASX:HMY) business as it appears the company may be on the cusp of a considerable accomplishment. Harmoney Corp Limited provides online secured and unsecured personal loans in Australia and New Zealand. With the latest financial year loss of AU$7.6m and a trailing-twelve-month loss of AU$4.8m, the AU$44m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Harmoney'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.
View our latest analysis for Harmoney
According to the 3 industry analysts covering Harmoney, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$2.2m in 2026. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 86%, 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 Harmoney's upcoming projects, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Harmoney currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. 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 Harmoney, so if you are interested in understanding the company at a deeper level, take a look at Harmoney's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:
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Historical Track Record: What has Harmoney's 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 Harmoney's 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.