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LendingTree, Inc. (NASDAQ:TREE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. LendingTree, Inc., through its subsidiary, operates online consumer platform in the United States. The company’s loss has recently broadened since it announced a US$42m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$55m, moving it further away from breakeven. Many investors are wondering about the rate at which LendingTree will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 7 industry analysts covering LendingTree, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$9.8m in 2025. So, the company is predicted to breakeven approximately a year 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 63%, 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 LendingTree's growth isn’t the focus of this broad overview, though, 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.
Check out our latest analysis for LendingTree
Before we wrap up, there’s one issue worth mentioning. LendingTree currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 key fundamentals of LendingTree which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at LendingTree, take a look at LendingTree's company page on Simply Wall St. We've also put together a list of essential factors you should further research:
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Historical Track Record: What has LendingTree'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 LendingTree'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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.