Yahoo Finance When Will City of London Group plc (LON:CIN) Turn A Profit?
We feel now is a pretty good time to analyse City of London Group plc's (LON:CIN) business as it appears the company may be on the cusp of a considerable accomplishment. City of London Group plc primarily focuses on the provision of finance to the SME sector in the United Kingdom. The UK£63m market-cap company posted a loss in its most recent financial year of UK£9.7m and a latest trailing-twelve-month loss of UK£9.0m shrinking the gap between loss and breakeven. As path to profitability is the topic on City of London Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for City of London Group
City of London Group is bordering on breakeven, according to the 2 British Diversified Financial analysts. They expect the company to post a final loss in 2022, before turning a profit of UK£6.3m in 2023. So, the company is predicted to breakeven approximately 2 years from today. 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 66% 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.
Underlying developments driving City of London Group's growth isn’t the focus of this broad overview, though, 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. City of London Group currently has a debt-to-equity ratio of over 2x. Typically, 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 City of London 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 City of London Group, take a look at City of London Group's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:
Historical Track Record: What has City of London Group's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on City of London 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. 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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