Analysts Expect Home Consortium Limited (ASX:HMC) To Breakeven Soon

We feel now is a pretty good time to analyse Home Consortium Limited's (ASX:HMC) business as it appears the company may be on the cusp of a considerable accomplishment. Home Consortium Limited, together with its subsidiaries, owns, develops, and manages real estate properties in Australia. On 30 June 2020, the AU$1.2b market-cap company posted a loss of AU$2.8m for its most recent financial year. The most pressing concern for investors is Home Consortium's path to profitability – when will it 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 Home Consortium

Home Consortium is bordering on breakeven, according to the 3 Australian REITs analysts. They expect the company to post a final loss in 2020, before turning a profit of AU$36m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 56% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Home Consortium's growth isn’t the focus of this broad overview, though, take into account that typically 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 Home Consortium is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Home Consortium's case is 50%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Home Consortium, so if you are interested in understanding the company at a deeper level, take a look at Home Consortium's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. Valuation: What is Home Consortium 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 Home Consortium 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 Home Consortium’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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