Harmoney Corp Limited's (ASX:HMY) Path To Profitability

We feel now is a pretty good time to analyse Harmoney Corp Limited's (ASX:HMY) business as it appears the company may be on the cusp of a considerable accomplishment. Harmoney Corp Limited provides online unsecured personal loans in Australia and New Zealand. The AU$43m market-cap company posted a loss in its most recent financial year of AU$18m and a latest trailing-twelve-month loss of AU$17m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Harmoney 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.

View our latest analysis for Harmoney

According to the 2 industry analysts covering Harmoney, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$1.6m in 2025. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 111%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Harmoney given that this is a high-level summary, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Harmoney currently has a debt-to-equity ratio of over 2x. 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 key fundamentals of Harmoney 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 Harmoney, take a look at Harmoney's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Historical Track Record: What has Harmoney'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 Harmoney'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.

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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.