With the business potentially at an important milestone, we thought we'd take a closer look at Hostmore plc's (LON:MORE) future prospects. Hostmore plc operates in the hospitality business. On 01 January 2023, the UK£23m market-cap company posted a loss of UK£98m for its most recent financial year. Many investors are wondering about the rate at which Hostmore will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Hostmore
According to the 2 industry analysts covering Hostmore, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of UK£2.1m in 2024. 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 118% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Hostmore's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Hostmore is its debt-to-equity ratio of 137%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Hostmore to cover in one brief article, but the key fundamentals for the company can all be found in one place – Hostmore's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
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Valuation: What is Hostmore 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 Hostmore 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 Hostmore’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.