Analysts Expect FlexShopper, Inc. (NASDAQ:FPAY) To Breakeven Soon

We feel now is a pretty good time to analyse FlexShopper, Inc.'s (NASDAQ:FPAY) business as it appears the company may be on the cusp of a considerable accomplishment. FlexShopper, Inc., through its wholly owned subsidiary, FlexShopper, LLC operates as an online lease-to-own (LTO) retailer and LTO payment solution provider. The US$73m market-cap company posted a loss in its most recent financial year of US$1.9m and a latest trailing-twelve-month loss of US$4.1m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on FlexShopper'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.

Check out our latest analysis for FlexShopper

Consensus from 2 of the American Diversified Financial analysts is that FlexShopper is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$8.5m in 2021. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 122% 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 FlexShopper's growth isn’t the focus of this broad overview, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. FlexShopper currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on FlexShopper, so if you are interested in understanding the company at a deeper level, take a look at FlexShopper's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Historical Track Record: What has FlexShopper'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 FlexShopper'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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