Colony Capital, Inc.'s (NYSE:CLNY) Profit Outlook

By
Simply Wall St
Published
January 09, 2021
NYSE:CLNY

Colony Capital, Inc. (NYSE:CLNY) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Colony Capital, Inc. (NYSE: CLNY) is a leading global investment firm with a heritage of identifying and capitalizing on key secular trends in real estate. The company’s loss has recently broadened since it announced a US$2.7b loss in the full financial year, compared to the latest trailing-twelve-month loss of US$2.8b, moving it further away from breakeven. The most pressing concern for investors is Colony Capital's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Colony Capital

Colony Capital is bordering on breakeven, according to the 3 American REITs analysts. They expect the company to post a final loss in 2022, before turning a profit of US$123m in 2023. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 84% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:CLNY Earnings Per Share Growth January 9th 2021

We're not going to go through company-specific developments for Colony Capital given that this is a high-level summary, however, keep in mind that by and large 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 Colony Capital is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Colony Capital's case is 99%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Colony Capital to cover in one brief article, but the key fundamentals for the company can all be found in one place – Colony Capital's company page on Simply Wall St. We've also put together a list of important factors you should further examine:

  1. Valuation: What is Colony Capital 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 Colony Capital 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 Colony Capital’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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


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