Distribution Finance Capital Holdings plc (LON:DFCH): When Will It Breakeven?

Distribution Finance Capital Holdings plc (LON:DFCH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Distribution Finance Capital Holdings plc operates as a specialized finance company in the United Kingdom. The UK£119m market-cap company posted a loss in its most recent financial year of UK£14m and a latest trailing-twelve-month loss of UK£13m shrinking the gap between loss and breakeven. As path to profitability is the topic on Distribution Finance Capital Holdings' 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 Distribution Finance Capital Holdings

Distribution Finance Capital Holdings is bordering on breakeven, according to some British Diversified Financial analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£6.2m in 2022. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 68% is expected, which is extremely buoyant. 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 Distribution Finance Capital Holdings' upcoming projects, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Distribution Finance Capital Holdings 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. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Distribution Finance Capital Holdings, so if you are interested in understanding the company at a deeper level, take a look at Distribution Finance Capital Holdings' company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Historical Track Record: What has Distribution Finance Capital Holdings' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Distribution Finance Capital Holdings' 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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