With the business potentially at an important milestone, we thought we'd take a closer look at Hammerson plc's (LON:HMSO) future prospects. At Hammerson, we create vibrant, continually evolving spaces, in and around major cities, where people and brands want to be. The UK£1.4b market-cap company posted a loss in its most recent financial year of UK£1.7b and a latest trailing-twelve-month loss of UK£953m shrinking the gap between loss and breakeven. As path to profitability is the topic on Hammerson's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Hammerson is bordering on breakeven, according to the 10 British REITs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£59m in 2023. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Hammerson's growth isn’t the focus of this broad overview, however, 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. Generally, the rule of thumb is 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 around investing in the loss-making company.
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 relevant factors you should further examine:
- 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.
- 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.
- 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.
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