Breakeven Is Near for Quhuo Limited (NASDAQ:QH)

Quhuo Limited (NASDAQ:QH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Quhuo Limited, through its subsidiaries, operates a workforce operational solution platform in the People’s Republic of China. The US$363m market-cap company’s loss lessened since it announced a CN¥12m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥8.3m, as it approaches breakeven. Many investors are wondering about the rate at which Quhuo will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Quhuo

Consensus from 2 of the American Commercial Services analysts is that Quhuo is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CN¥23m in 2021. Therefore, the company is expected to breakeven roughly 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 102% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Quhuo's growth isn’t the focus of this broad overview, 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.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 26% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Quhuo's 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 Quhuo'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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