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With the business potentially at an important milestone, we thought we'd take a closer look at APM Human Services International Limited's (ASX:APM) future prospects. APM Human Services International Limited provides human and health services in Australia and internationally. The AU$2.5b market-cap company announced a latest loss of AU$5.8m on 30 June 2021 for its most recent financial year result. Many investors are wondering about the rate at which APM Human Services International will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 4 industry analysts covering APM Human Services International, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$99m in 2022. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 53%, 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 APM Human Services International given that this is a high-level summary, but, 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 APM Human Services International is its debt-to-equity ratio of over 2x. 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 around investing in the loss-making company.
There are too many aspects of APM Human Services International to cover in one brief article, but the key fundamentals for the company can all be found in one place – APM Human Services International's company page on Simply Wall St. We've also put together a list of important aspects you should look at:
Valuation: What is APM Human Services International 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 APM Human Services International 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 APM Human Services International’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.
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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.