When Will Openpay Group Ltd (ASX:OPY) Breakeven?

By
Simply Wall St
Published
November 23, 2021
ASX:OPY
Source: Shutterstock

Openpay Group Ltd (ASX:OPY) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Openpay Group Ltd provides Buy Now Pay Later (BNPL) payment solutions in Australia, New Zealand, the United Kingdom, and the United States. The AU$134m market-cap company announced a latest loss of AU$63m on 30 June 2021 for its most recent financial year result. The most pressing concern for investors is Openpay Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Openpay Group

According to the 2 industry analysts covering Openpay Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$1.4m in 2024. So, the company is predicted to breakeven approximately 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:OPY Earnings Per Share Growth November 24th 2021

Underlying developments driving Openpay Group's growth isn’t the focus of this broad overview, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Openpay Group is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Openpay Group's case is 79%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Openpay Group 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 Openpay Group, take a look at Openpay Group's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

  1. Historical Track Record: What has Openpay Group'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 Openpay Group'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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.