Hostelworld Group plc (LON:HSW) Is Expected To Breakeven In The Near Future

Hostelworld Group plc (LON:HSW) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Hostelworld Group plc operates an online booking platform worldwide. With the latest financial year loss of €17m and a trailing-twelve-month loss of €10m, the UK£169m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Hostelworld Group'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 Hostelworld Group

Consensus from 7 of the British Hospitality analysts is that Hostelworld Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of €4.1m in 2024. Therefore, the company is expected to breakeven just over a year from now. 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 87%, 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 Hostelworld Group's upcoming projects, however, bear in mind that generally 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 38% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Hostelworld Group 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 Hostelworld Group 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 Hostelworld Group’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. 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.