With the business potentially at an important milestone, we thought we'd take a closer look at Metro Bank PLC's (LON:MTRO) future prospects. Metro Bank PLC, together with its subsidiaries, provides retail and commercial banking services in the United Kingdom. The UK£147m market-cap company’s loss lessened since it announced a UK£248m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£169m, as it approaches breakeven. As path to profitability is the topic on Metro Bank's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Metro Bank is bordering on breakeven, according to the 6 British Banks analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£51m in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 94% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Metro Bank's growth isn’t the focus of this broad overview, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Metro Bank is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Metro Bank's case is 78%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of Metro Bank to cover in one brief article, but the key fundamentals for the company can all be found in one place – Metro Bank's company page on Simply Wall St. We've also put together a list of important factors you should further examine:
Historical Track Record: What has Metro Bank's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Metro Bank'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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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