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When Will Metro Bank PLC (LON:MTRO) Become Profitable?

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·2-min read
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We feel now is a pretty good time to analyse Metro Bank PLC's (LON:MTRO) business as it appears the company may be on the cusp of a considerable accomplishment. Metro Bank PLC, together with its subsidiaries, provides retail and commercial banking services in the United Kingdom. The UK£155m market-cap company announced a latest loss of UK£248m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Metro Bank's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Metro Bank

Metro Bank is bordering on breakeven, according to the 7 British Banks analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£3.4m in 2024. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 93% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Metro Bank given that this is a high-level summary, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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 74%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

  1. 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.

  2. 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.

  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.

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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