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With the business potentially at an important milestone, we thought we'd take a closer look at Rent.com.au Limited's (ASX:RNT) future prospects. Rent.com.au Limited, together with its subsidiaries, operates real estate websites focusing on the rental property market in Australia. The AU$39m market-cap company posted a loss in its most recent financial year of AU$1.7m and a latest trailing-twelve-month loss of AU$1.1m shrinking the gap between loss and breakeven. The most pressing concern for investors is Rent.com.au's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to some industry analysts covering Rent.com.au, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$1.4m in 2023. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 97%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Rent.com.au's growth isn’t the focus of this broad overview, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Rent.com.au currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are too many aspects of Rent.com.au to cover in one brief article, but the key fundamentals for the company can all be found in one place – Rent.com.au's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:
Valuation: What is Rent.com.au 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 Rent.com.au 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 Rent.com.au’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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