Breakeven On The Horizon For Rent.com.au Limited (ASX:RNT)

With the business potentially at an important milestone, we thought we'd take a closer look at Rent.com.au Limited's (ASX:RNT) future prospects. Rent.com.au Limited, together with its subsidiaries, operates real estate websites focusing on the rental property market in Australia. The AU$93m market-cap company posted a loss in its most recent financial year of AU$1.7m and a latest trailing-twelve-month loss of AU$1.1m shrinking the gap between loss and breakeven. As path to profitability is the topic on Rent.com.au's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Rent.com.au

Rent.com.au is bordering on breakeven, according to some Australian Interactive Media and Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$1.6m in 2023. The company is therefore projected to breakeven around 2 years from today. 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 110%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Rent.com.au given that this is a high-level summary, however, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Rent.com.au has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Rent.com.au 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 Rent.com.au, take a look at Rent.com.au's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

1. Valuation: What is Rent.com.au worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Rent.com.au is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rent.com.au’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.

If you decide to trade Rent.com.au, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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