Compass, Inc. (NYSE:COMP): When Will It Breakeven?

We feel now is a pretty good time to analyse Compass, Inc.'s (NYSE:COMP) business as it appears the company may be on the cusp of a considerable accomplishment. Compass, Inc. provides real estate brokerage services in the United States. On 31 December 2023, the US$1.6b market-cap company posted a loss of US$321m for its most recent financial year. As path to profitability is the topic on Compass' 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 Compass

Compass is bordering on breakeven, according to the 7 American Real Estate analysts. They expect the company to post a final loss in 2025, before turning a profit of US$107m in 2026. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 85%, 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 Compass' upcoming projects, however, 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 5.7% 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:

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

1. Valuation: What is Compass 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 Compass 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 Compass’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.