Capital & Regional Plc's (LON:CAL) Profit Outlook

We feel now is a pretty good time to analyse Capital & Regional Plc's (LON:CAL) business as it appears the company may be on the cusp of a considerable accomplishment. Capital & Regional is a UK focused retail property REIT specialising in shopping centres that dominate their catchment, serving the non-discretionary and value orientated needs of the local communities. The UK£106m market-cap company posted a loss in its most recent financial year of UK£203m and a latest trailing-twelve-month loss of UK£129m shrinking the gap between loss and breakeven. The most pressing concern for investors is Capital & Regional's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Capital & Regional

Consensus from 3 of the British REITs analysts is that Capital & Regional is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£10m in 2022. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 81% year-on-year, on average, 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 Capital & Regional's growth isn’t the focus of this broad overview, but, bear in mind that typically 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. Capital & Regional currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 Capital & Regional, so if you are interested in understanding the company at a deeper level, take a look at Capital & Regional's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

1. Valuation: What is Capital & Regional 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 Capital & Regional 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 Capital & Regional’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. 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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