Braemar Hotels & Resorts, Inc. (NYSE:BHR): When Will It Breakeven?

By
Simply Wall St
Published
March 19, 2022
NYSE:BHR
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Braemar Hotels & Resorts, Inc.'s (NYSE:BHR) future prospects. Braemar Hotels & Resorts is a real estate investment trust (REIT) focused on investing in luxury hotels and resorts. The US$471m market-cap company announced a latest loss of US$40m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on Braemar Hotels & Resorts' 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.

Check out our latest analysis for Braemar Hotels & Resorts

According to the 4 industry analysts covering Braemar Hotels & Resorts, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$3.3m in 2023. The company is therefore projected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 53% is expected, 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
NYSE:BHR Earnings Per Share Growth March 19th 2022

We're not going to go through company-specific developments for Braemar Hotels & Resorts given that this is a high-level summary, however, bear in mind that typically 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 issue worth mentioning. Braemar Hotels & Resorts currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. 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 Braemar Hotels & Resorts, so if you are interested in understanding the company at a deeper level, take a look at Braemar Hotels & Resorts' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

  1. Valuation: What is Braemar Hotels & Resorts 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 Braemar Hotels & Resorts 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 Braemar Hotels & Resorts’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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.