Wisr Limited’s (ASX:WZR): Wisr Limited engages in the lending business in Australia. The AU$107m market-cap posted a loss in its most recent financial year of -AU$6.2m and a latest trailing-twelve-month loss of -AU$6.6m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which WZR will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for WZR.
WZR is bordering on breakeven, according to Consumer Finance analysts. They expect the company to post a final loss in 2020, before turning a profit of AU$3.1m in 2021. So, WZR is predicted to breakeven approximately 2 years from today. What rate will WZR have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 58%, which is extremely buoyant. If this rate turns out to be too aggressive, WZR may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for WZR given that this is a high-level summary, 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 I would like to bring into light with WZR is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in WZR’s case is 40%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on WZR, so if you are interested in understanding the company at a deeper level, take a look at WZR’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:
- Historical Track Record: What has WZR’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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Wisr’s board and the CEO’s back ground.
- 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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