Despegar.com, Corp. (NYSE:DESP) On The Verge Of Breaking Even

We feel now is a pretty good time to analyse Despegar.com, Corp.'s (NYSE:DESP) business as it appears the company may be on the cusp of a considerable accomplishment. Despegar.com, Corp., an online travel company, provides a range of travel and travel-related products to leisure and corporate travelers through its websites and mobile applications in Latin America and the United States. With the latest financial year loss of US$6.6m and a trailing-twelve-month loss of US$13m, the US$878m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Despegar.com'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.

View our latest analysis for Despegar.com

According to the 6 industry analysts covering Despegar.com, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$67m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 39% 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.

We're not going to go through company-specific developments for Despegar.com given that this is a high-level summary, but, keep in mind that generally 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 Despegar.com is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Despegar.com's case is 52%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Despegar.com 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 Despegar.com, take a look at Despegar.com's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

1. Valuation: What is Despegar.com 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 Despegar.com 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 Despegar.com’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. 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.