Plenti Group Limited's (ASX:PLT) Path To Profitability

By
Simply Wall St
Published
January 15, 2022
ASX:PLT
Source: Shutterstock

We feel now is a pretty good time to analyse Plenti Group Limited's (ASX:PLT) business as it appears the company may be on the cusp of a considerable accomplishment. Plenti Group Limited engages in the consumer fintech and investment business in Australia. The company’s loss has recently broadened since it announced a AU$15m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$16m, moving it further away from breakeven. Many investors are wondering about the rate at which Plenti Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Plenti Group

Consensus from 3 of the Australian Consumer Finance analysts is that Plenti Group is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$6.5m in 2023. The company is therefore projected to breakeven just over a year 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 111% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
ASX:PLT Earnings Per Share Growth January 15th 2022

Given this is a high-level overview, we won’t go into details of Plenti Group's upcoming projects, though, bear in mind that generally 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. Plenti Group currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has Plenti 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 Plenti 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.

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