Analysts Expect Hostmore plc (LON:MORE) To Breakeven Soon

With the business potentially at an important milestone, we thought we’d take a closer look Hostmore plc’s (LON:MORE) future prospects. Hostmore plc operates in the hospitality business. The UK£17m market-cap company posted a loss in its most recent financial year of UK£567k and a latest trailing-twelve-month loss of UK£5.9m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Hostmore’s path to profitability – when will it break even? We’ve put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out the: opportunities and risks within the GB Hospitality industry.

According to the 3 industry analysts covering Hostmore, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of UK£2.1m in 2022. So, the company is predicted to break even approximately a year from now or less! At what rate will the company have to grow in order to realize the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 70%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

LSE: MORE Earnings Per Share Growth November 24th 2022

Underlying developments driving Hostmore’s growth isn’t the focus of this broad overview, but, keep in mind that generally 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 is one aspect worth mentioning. The company has managed its capital prudently, with debt making up 33% 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:

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 compiled a list of pertinent aspects you should look at.

  1. 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.
  2. Management Team:: An experienced management team at the helm increases our confidence in the business – take a look at who sits on Hostmore’s board and the CEO’s background.
  3. 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.

Valuation is complex, but we’re helping to make it simple.

Find out whether Hostmore: is potentially over or undervalued by checking out our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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 into account 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.

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