Yahoo Finance Hostelworld Group plc (LON:HSW) On The Verge Of Breaking Even
With the business potentially at an important milestone, we thought we'd take a closer look at Hostelworld Group plc's (LON:HSW) future prospects. Hostelworld Group plc operates an online booking platform worldwide. The UK£157m market-cap company announced a latest loss of €17m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Hostelworld Group will turn a profit, with the big question being “when will the company 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 Hostelworld Group
According to the 6 industry analysts covering Hostelworld Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of €1.8m in 2023. So, the company is predicted to breakeven approximately a year 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 77% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Hostelworld Group's growth isn’t the focus of this broad overview, but, keep 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 issue worth mentioning. Hostelworld Group currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Hostelworld Group's case is 60%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Hostelworld Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Hostelworld Group's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Valuation: What is Hostelworld 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 Hostelworld 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 Hostelworld 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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