When Will Purplebricks Group plc (LON:PURP) Breakeven?

By
Simply Wall St
Published
May 14, 2021
AIM:PURP

Purplebricks Group plc (LON:PURP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Purplebricks Group plc engages in the real estate agency business in the United Kingdom. The UK£304m market-cap company posted a loss in its most recent financial year of UK£12m and a latest trailing-twelve-month loss of UK£5.0m shrinking the gap between loss and breakeven. As path to profitability is the topic on Purplebricks 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.

See our latest analysis for Purplebricks Group

Consensus from 3 of the British Real Estate analysts is that Purplebricks Group is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of UK£1.4m in 2022. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 46% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
AIM:PURP Earnings Per Share Growth May 14th 2021

Underlying developments driving Purplebricks Group's growth isn’t the focus of this broad overview, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Purplebricks Group has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Purplebricks Group 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 Purplebricks Group, take a look at Purplebricks Group's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

  1. Valuation: What is Purplebricks 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 Purplebricks 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 Purplebricks 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. 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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