Breakeven Is Near for Hostmore plc (LON:MORE)

Hostmore plc (LON:MORE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Hostmore plc operates in the hospitality business. The UK£25m market-cap company posted a loss in its most recent financial year of UK£98m and a latest trailing-twelve-month loss of UK£95m shrinking the gap between loss and breakeven. As path to profitability is the topic on Hostmore's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Hostmore

According to the 2 industry analysts covering Hostmore, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of UK£2.1m in 2024. The company is therefore projected to breakeven around 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 121% is expected, which is rather optimistic! 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 Hostmore's upcoming projects, but, keep in mind that by and large 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. Hostmore currently has a 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.

Next Steps:

This article is not intended to be a comprehensive analysis on Hostmore, so if you are interested in understanding the company at a deeper level, take a look at Hostmore's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Hostmore 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 Hostmore 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 Hostmore’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.