Hemisphere Media Group, Inc.'s (NASDAQ:HMTV) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Hemisphere Media Group, Inc.'s (NASDAQ:HMTV) future prospects. Hemisphere Media Group, Inc., the Spanish-language media company, operates broadcast and cable television networks, and digital content platforms. The company’s loss has recently broadened since it announced a US$3.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$7.0m, moving it further away from breakeven. As path to profitability is the topic on Hemisphere Media Group'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.

View our latest analysis for Hemisphere Media Group

According to the 2 industry analysts covering Hemisphere Media Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$11m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 108%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Hemisphere Media Group given that this is a high-level summary, but, bear 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 would like to bring into light with Hemisphere Media Group is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Hemisphere Media Group's case is 93%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Hemisphere Media Group, so if you are interested in understanding the company at a deeper level, take a look at Hemisphere Media Group's company page on Simply Wall St. We've also put together a list of key aspects you should further research:

1. Valuation: What is Hemisphere Media Group 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 Hemisphere Media Group 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 Hemisphere Media Group’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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