When Will Wisr Limited (ASX:WZR) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Wisr Limited's (ASX:WZR) future prospects. Wisr Limited engages in the lending business in Australia. The AU$415m market-cap company posted a loss in its most recent financial year of AU$24m and a latest trailing-twelve-month loss of AU$20m shrinking the gap between loss and breakeven. As path to profitability is the topic on Wisr's investors mind, we've decided to gauge market sentiment. 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 Wisr

According to some industry analysts covering Wisr, breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of AU$12m in 2023. The company is therefore projected to breakeven around 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 98%, 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.

Given this is a high-level overview, we won’t go into details of Wisr's upcoming projects, but, 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.

One thing we would like to bring into light with Wisr is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

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