Yahoo Finance Loss-Making HRL Holdings Limited (ASX:HRL) Set To Breakeven
With the business potentially at an important milestone, we thought we'd take a closer look at HRL Holdings Limited's (ASX:HRL) future prospects. HRL Holdings Limited provides various environmental and laboratory services in Australia and New Zealand. On 30 June 2020, the AU$52m market-cap company posted a loss of AU$2.5m for its most recent financial year. Many investors are wondering about the rate at which HRL Holdings will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for HRL Holdings
HRL Holdings is bordering on breakeven, according to the 4 Australian Commercial Services analysts. They expect the company to post a final loss in 2020, before turning a profit of AU$1.3m in 2021. The company is therefore projected to breakeven around 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 82% is expected, which is rather optimistic! 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 HRL Holdings' upcoming projects, but, bear 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’d like to point out is that The company has managed its capital judiciously, with debt making up 11% 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 HRL Holdings, so if you are interested in understanding the company at a deeper level, take a look at HRL Holdings' company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:
Valuation: What is HRL 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 HRL Holdings 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 HRL Holdings’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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