Helbor Empreendimentos S.A.'s (BVMF:HBOR3) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Helbor Empreendimentos S.A.'s (BVMF:HBOR3) future prospects. Helbor Empreendimentos S.A., together with its subsidiaries, engages in the real estate development activities in Brazil. The R$1.4b market-cap company posted a loss in its most recent financial year of R$89m and a latest trailing-twelve-month loss of R$11m shrinking the gap between loss and breakeven. As path to profitability is the topic on Helbor Empreendimentos' 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 Helbor Empreendimentos

Helbor Empreendimentos is bordering on breakeven, according to the 2 Brazilian Real Estate analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of R$115m in 2021. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 67%, which is rather optimistic! 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 Helbor Empreendimentos' upcoming projects, however, 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 Helbor Empreendimentos is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Helbor Empreendimentos' case is 99%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Helbor Empreendimentos 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 Helbor Empreendimentos 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 Helbor Empreendimentos’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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