We feel now is a pretty good time to analyse NexLiving Communities Inc.'s (CVE:NXLV) business as it appears the company may be on the cusp of a considerable accomplishment. NexLiving Communities Inc. owns and manages multi-unit residential real estate properties in Canada. The CA$31m market-cap company posted a loss in its most recent financial year of CA$2.2m and a latest trailing-twelve-month loss of CA$2.5m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is NexLiving Communities' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 2 of the Canadian Real Estate analysts is that NexLiving Communities is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of CA$819k in 2022. So, the company is predicted to breakeven just over a year 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 150%, 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.
Underlying developments driving NexLiving Communities' growth isn’t the focus of this broad overview, though, 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 NexLiving Communities is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of NexLiving Communities 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 NexLiving Communities, take a look at NexLiving Communities' company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:
- Valuation: What is NexLiving Communities 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 NexLiving Communities is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NexLiving Communities’s board and the CEO’s background.
- 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.
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.
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