Wisr Limited’s (ASX:WZR) Path To Profitability

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.

Check out our latest analysis for Wisr

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.

ASX:WZR Past and Future Earnings, August 13th 2019
ASX:WZR Past and Future Earnings, August 13th 2019

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.

Next Steps:

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:

  1. 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.
  2. 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.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.