Prospa Group Limited (ASX:PGL) is about to turn from loss to profit

Prospa Group Limited (ASX:PGL) may be approaching a major achievement in his company, so we’d like to shed some light on the company. Prospa Group Limited, a fintech company, operates as an online lender in Australia. The A$139 million market capitalization company recorded a loss of A$9.5 million in its last financial year and a final loss of A$856,000 in the last twelve months, narrowing the gap between the loss and the break-even point. Many investors are wondering about the rate at which Prospa Group will make a profit, with the big question being “when will the business break even?” We’ve put together a brief overview of industry analysts’ expectations for the company, its year of profitability and its implied growth rate.

Check out our latest analysis for Prospa Group

The consensus of 2 of Australia’s Consumer Finance analysts is that Prospa Group is close to breaking even. They forecast the business to incur a terminal loss in 2021, before generating positive profits of A$6.1 million in 2022. Therefore, the business is expected to break even in about a year or less! How fast will the business need to grow to achieve the consensus estimates predicting breakeven in less than 12 months? Using a line of best fit, we calculated an average annual growth rate of 66%, which is extremely dynamic. If this rate turns out to be too aggressive, the company could become profitable much later than analysts predict.

earnings per share growth

The developments underlying the growth of the Prospa Group are not the focus of this general overview, however, bear in mind that in general a high rate of growth is not unusual, particularly when a company is in a period of investment.

One thing we would like to highlight with Prospa Group is its debt to equity ratio of over 2x. Generally, the rule of thumb is that debt should not exceed 40% of your equity, and the company has far exceeded that figure. Note that higher debt increases the risk of investing in the loss-making business.

Next steps:

This article is not intended to be a full analysis on Prospa Group, so if you are interested in understanding the business on a deeper level, take a look at Prospa Group’s company page on Simply Wall St. We’ve also compiled a list of factors you should consider in more detail:

  1. Historical review: How has the Prospa Group performed in the past? Go deeper into the analysis of past history and take a look at the free visual representations of our analysis for clarity.

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

  3. Other High Performing Stocks: Are there other stocks that offer better prospects with a proven track record? Explore our free list of these great stocks here.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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