Kyndryl Holdings, Inc. (NYSE:KD) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse Kyndryl Holdings, Inc.'s (NYSE:KD) business as it appears the company may be on the cusp of a considerable accomplishment. Kyndryl Holdings, Inc. operates as a technology services company and IT infrastructure services provider worldwide. The US$6.2b market-cap company announced a latest loss of US$340m on 31 March 2024 for its most recent financial year result. As path to profitability is the topic on Kyndryl Holdings' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Kyndryl Holdings

Kyndryl Holdings is bordering on breakeven, according to the 5 American IT analysts. They expect the company to post a final loss in 2024, before turning a profit of US$186m in 2025. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 80% is expected, which signals high confidence from analysts. 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 Kyndryl Holdings' upcoming projects, though, 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.

One thing we would like to bring into light with Kyndryl Holdings is its debt-to-equity ratio of over 2x. Typically, 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:

There are key fundamentals of Kyndryl Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Kyndryl Holdings, take a look at Kyndryl Holdings' company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Valuation: What is Kyndryl Holdings 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 Kyndryl Holdings 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 Kyndryl Holdings’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com