When Can We Expect A Profit From Harmoney Corp Limited (ASX:HMY)?

With the business potentially at an important milestone, we thought we'd take a closer look at Harmoney Corp Limited's (ASX:HMY) future prospects. Harmoney Corp Limited provides online unsecured personal loans in Australia and New Zealand. The AU$35m 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, 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 Harmoney's growth isn’t the focus of this broad overview, but, take into account 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’s one issue worth mentioning. Harmoney currently has a debt-to-equity ratio of over 2x. Typically, 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:

This article is not intended to be a comprehensive analysis on Harmoney, so if you are interested in understanding the company at a deeper level, take a look at Harmoney's company page on Simply Wall St. We've also put together a list of key aspects you should look at:

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.