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Helloworld Travel Limited (ASX:HLO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Helloworld Travel Limited operates as a travel distribution company in Australia, New Zealand, and internationally. With the latest financial year loss of AU$28m and a trailing-twelve-month loss of AU$12m, the AU$324m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Helloworld Travel's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Helloworld Travel
Consensus from 5 of the Australian Hospitality analysts is that Helloworld Travel is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$5.8m in 2023. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 79% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Helloworld Travel's growth isn’t the focus of this broad overview, however, bear in mind that typically 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 Helloworld Travel has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Helloworld Travel, so if you are interested in understanding the company at a deeper level, take a look at Helloworld Travel's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
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Valuation: What is Helloworld Travel 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 Helloworld Travel is currently mispriced by the market.
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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 Helloworld Travel’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.