Breakeven Is Near for KE Holdings Inc. (NYSE:BEKE)

We feel now is a pretty good time to analyse KE Holdings Inc.'s (NYSE:BEKE) business as it appears the company may be on the cusp of a considerable accomplishment. KE Holdings Inc. operates an integrated online and offline platform for housing transactions and services in the People's Republic of China. The US$81b market-cap company posted a loss in its most recent financial year of CN¥4.1b and a latest trailing-twelve-month loss of CN¥3.8b shrinking the gap between loss and breakeven. As path to profitability is the topic on KE Holdings' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for KE Holdings

According to the 9 industry analysts covering KE Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CN¥5.2b in 2021. 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 70% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Underlying developments driving KE Holdings' growth isn’t the focus of this broad overview, though, bear in mind that by and large 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 15% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on KE Holdings, so if you are interested in understanding the company at a deeper level, take a look at KE Holdings' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Valuation: What is KE 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 KE 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 KE 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.

This article by Simply Wall St is general in nature. 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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