When Will Hammerson plc (LON:HMSO) Become Profitable?

By
Simply Wall St
Published
February 18, 2022
LSE:HMSO
Source: Shutterstock

We feel now is a pretty good time to analyse Hammerson plc's (LON:HMSO) business as it appears the company may be on the cusp of a considerable accomplishment. At Hammerson, we create vibrant, continually evolving spaces, in and around major cities, where people and brands want to be. The UK£1.7b market-cap company’s loss lessened since it announced a UK£1.7b loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£953m, as it approaches breakeven. The most pressing concern for investors is Hammerson's path to profitability – when will it breakeven? 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 Hammerson

Consensus from 10 of the British REITs analysts is that Hammerson is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£41m in 2023. The company is therefore projected 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 71%, 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
LSE:HMSO Earnings Per Share Growth February 18th 2022

Given this is a high-level overview, we won’t go into details of Hammerson's upcoming projects, 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 would like to bring into light with Hammerson is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Hammerson's case is 74%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Hammerson 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 Hammerson 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 Hammerson’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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