Yahoo Finance When Will Ardent Leisure Group Limited (ASX:ALG) Breakeven?
With the business potentially at an important milestone, we thought we'd take a closer look at Ardent Leisure Group Limited's (ASX:ALG) future prospects. Ardent Leisure Group Limited owns and operates leisure and entertainment assets in Australia and the United States. On 29 June 2021, the AU$744m market-cap company posted a loss of AU$87m for its most recent financial year. The most pressing concern for investors is Ardent Leisure Group's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Ardent Leisure Group
According to the 4 industry analysts covering Ardent Leisure Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$5.6m in 2023. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. 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 Ardent Leisure Group's upcoming projects, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. Ardent Leisure Group currently has a debt-to-equity ratio of 154%. Generally, the rule of thumb is 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 in investing in the loss-making company.
Next Steps:
There are key fundamentals of Ardent Leisure Group 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 Ardent Leisure Group, take a look at Ardent Leisure Group's company page on Simply Wall St. We've also put together a list of essential factors you should look at:
Valuation: What is Ardent Leisure Group 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 Ardent Leisure Group 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 Ardent Leisure Group’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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