When Can We Expect A Profit From Kyndryl Holdings, Inc. (NYSE:KD)?

With the business potentially at an important milestone, we thought we'd take a closer look at Kyndryl Holdings, Inc.'s (NYSE:KD) future prospects. Kyndryl Holdings, Inc. operates as a technology services company and IT infrastructure services provider worldwide. The US$1.9b market-cap company posted a loss in its most recent financial year of US$2.3b and a latest trailing-twelve-month loss of US$2.1b shrinking the gap between loss and breakeven. The most pressing concern for investors is Kyndryl Holdings' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out the opportunities and risks within the US IT industry.

Consensus from 2 of the American IT analysts is that Kyndryl Holdings is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$146m in 2025. Therefore, the company is expected to breakeven roughly 3 years from now. 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 79%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Kyndryl Holdings' growth isn’t the focus of this broad overview, though, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Kyndryl Holdings currently has a debt-to-equity ratio of 111%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Kyndryl Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Kyndryl Holdings' company page on Simply Wall St. We've also compiled a list of important 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.