Construtora Tenda S.A. (BVMF:TEND3) Could Be Less Than A Year Away From Profitability

Construtora Tenda S.A. (BVMF:TEND3) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Construtora Tenda S.A. operates as a construction company in Brazil. The R$1.5b market-cap company’s loss lessened since it announced a R$96m loss in the full financial year, compared to the latest trailing-twelve-month loss of R$50m, as it approaches breakeven. As path to profitability is the topic on Construtora Tenda'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 Construtora Tenda

Construtora Tenda is bordering on breakeven, according to the 9 Brazilian Consumer Durables analysts. They expect the company to post a final loss in 2023, before turning a profit of R$121m in 2024. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 80% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Construtora Tenda's upcoming projects, though, keep in mind that generally 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 Construtora Tenda is its debt-to-equity ratio of 124%. Typically, 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 in investing in the loss-making company.

Next Steps:

There are too many aspects of Construtora Tenda to cover in one brief article, but the key fundamentals for the company can all be found in one place – Construtora Tenda's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

1. Valuation: What is Construtora Tenda 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 Construtora Tenda 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 Construtora Tenda’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.

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

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@simplywallst.com