Stock Analysis

Analysts Are Optimistic We'll See A Profit From Metro Bank PLC (LON:MTRO)

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LSE:MTRO
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With the business potentially at an important milestone, we thought we'd take a closer look at Metro Bank PLC's (LON:MTRO) future prospects. Metro Bank PLC, together with its subsidiaries, provides retail and commercial banking services in the United Kingdom. On 31 December 2022, the UK£179m market-cap company posted a loss of UK£73m for its most recent financial year. As path to profitability is the topic on Metro Bank's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Metro Bank

Consensus from 5 of the British Banks analysts is that Metro Bank is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of UK£10m in 2023. The company is therefore projected to breakeven around 12 months 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 86%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
LSE:MTRO Earnings Per Share Growth May 24th 2023

Given this is a high-level overview, we won’t go into details of Metro Bank's upcoming projects, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Metro Bank currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Metro Bank's case is 87%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Metro Bank to cover in one brief article, but the key fundamentals for the company can all be found in one place – Metro Bank's company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

  1. Valuation: What is Metro Bank 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 Metro Bank 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 Metro Bank’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.

Valuation is complex, but we're helping make it simple.

Find out whether Metro Bank Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.