LuxUrban Hotels Inc. (NASDAQ:LUXH) Has Found A Path To Profitability

We feel now is a pretty good time to analyse LuxUrban Hotels Inc.'s (NASDAQ:LUXH) business as it appears the company may be on the cusp of a considerable accomplishment. LuxUrban Hotels Inc. utilizes an asset light business model to lease entire hotels on a long-term basis and rent out hotel rooms in the properties it leases. The company’s loss has recently broadened since it announced a US$9.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$33m, moving it further away from breakeven. Many investors are wondering about the rate at which LuxUrban Hotels will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for LuxUrban Hotels

According to the 4 industry analysts covering LuxUrban Hotels, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$26m in 2024. The company is therefore projected to breakeven around 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 126%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of LuxUrban Hotels' upcoming projects, however, bear 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’d like to point out is that The company has managed its capital prudently, with debt making up 24% 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 LuxUrban Hotels to cover in one brief article, but the key fundamentals for the company can all be found in one place – LuxUrban Hotels' company page on Simply Wall St. We've also put together a list of essential factors you should further research:

1. Historical Track Record: What has LuxUrban Hotels' 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 LuxUrban Hotels' 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.