Breakeven On The Horizon For Trainline Plc (LON:TRN)

We feel now is a pretty good time to analyse Trainline Plc's (LON:TRN) business as it appears the company may be on the cusp of a considerable accomplishment. Trainline Plc operates an independent rail and coach travel platform that sells rail and coach tickets worldwide. The UK£2.0b market-cap company announced a latest loss of UK£91m on 28 February 2021 for its most recent financial year result. Many investors are wondering about the rate at which Trainline will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Trainline

Consensus from 8 of the British Hospitality analysts is that Trainline is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of UK£28m in 2023. The company is therefore projected to breakeven around 2 years from now. 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 101%, 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.

earnings-per-share-growth

Underlying developments driving Trainline's growth isn’t the focus of this broad overview, though, take into account that typically 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. Trainline currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Trainline's case is 88%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Trainline, so if you are interested in understanding the company at a deeper level, take a look at Trainline's company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is Trainline 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 Trainline is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Trainline’s board and the CEO’s background.

3. 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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