Clipper Realty Inc. (NYSE:CLPR): When Will It Breakeven?

We feel now is a pretty good time to analyse Clipper Realty Inc.'s (NYSE:CLPR) business as it appears the company may be on the cusp of a considerable accomplishment. Clipper Realty Inc. (NYSE: CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn. The US$287m market-cap company posted a loss in its most recent financial year of US$2.0m and a latest trailing-twelve-month loss of US$5.4m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Clipper Realty'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 Clipper Realty

According to the 3 industry analysts covering Clipper Realty, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$4.8m in 2021. 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 122%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Clipper Realty given that this is a high-level summary, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Clipper Realty is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Clipper Realty 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 Clipper Realty 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 Clipper Realty’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.
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