Fathom Holdings Inc. (NASDAQ:FTHM) Is Expected To Breakeven In The Near Future

By
Simply Wall St
Published
May 20, 2021
NasdaqCM:FTHM
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Fathom Holdings Inc.'s (NASDAQ:FTHM) future prospects. Fathom Holdings Inc. provides cloud-based real estate brokerage services in the South, Atlantic, Southwest, and Western parts of the United States. The US$480m market-cap company posted a loss in its most recent financial year of US$1.3m and a latest trailing-twelve-month loss of US$4.7m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Fathom Holdings will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Fathom Holdings

Fathom Holdings is bordering on breakeven, according to the 2 American Real Estate analysts. They expect the company to post a final loss in 2021, before turning a profit of US$2.3m in 2022. The company is therefore projected to breakeven just over a year from today. 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 83%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqCM:FTHM Earnings Per Share Growth May 20th 2021

We're not going to go through company-specific developments for Fathom Holdings given that this is a high-level summary, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 1.8% 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 Fathom Holdings, so if you are interested in understanding the company at a deeper level, take a look at Fathom Holdings' company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

  1. Historical Track Record: What has Fathom Holdings' 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 Fathom Holdings' 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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