Yahoo Finance Analysts Expect R.E.A. Holdings plc (LON:RE.) To Breakeven Soon
R.E.A. Holdings plc (LON:RE.) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. R.E.A. Holdings plc engages in the cultivation of oil palms in the province of East Kalimantan in Indonesia. On 31 December 2021, the UK£70m market-cap company posted a loss of US$1.5m for its most recent financial year. Many investors are wondering about the rate at which R.E.A. Holdings 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 R.E.A. Holdings
According to some industry analysts covering R.E.A. Holdings, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$9.4m in 2022. The company is therefore projected to breakeven around 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 65% 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.
Underlying developments driving R.E.A. Holdings' growth isn’t the focus of this broad overview, but, 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 issue worth mentioning. R.E.A. Holdings currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in R.E.A. Holdings' case is 90%. 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 R.E.A. Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – R.E.A. Holdings' company page on Simply Wall St. We've also compiled a list of key factors you should look at:
Valuation: What is R.E.A. 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 R.E.A. 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 R.E.A. 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.
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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.
