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With the business potentially at an important milestone, we thought we'd take a closer look at Hammerson plc's (LON:HMSO) future prospects. At Hammerson, we create vibrant, continually evolving spaces, in and around major cities, where people and brands want to be. The UK£1.5b market-cap company’s loss lessened since it announced a UK£1.7b loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£953m, as it approaches breakeven. As path to profitability is the topic on Hammerson's 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.
According to the 10 industry analysts covering Hammerson, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of UK£59m in 2023. Therefore, the company is expected to breakeven roughly 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 71% year-on-year, on average, 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.
We're not going to go through company-specific developments for Hammerson given that this is a high-level summary, though, take into account that generally 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 Hammerson is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Hammerson's case is 74%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Hammerson 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 Hammerson, take a look at Hammerson's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:
Valuation: What is Hammerson 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 Hammerson is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Hammerson’s board and the CEO’s background.
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.
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.
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