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With the business potentially at an important milestone, we thought we'd take a closer look at Compass, Inc.'s (NYSE:COMP) future prospects. Compass, Inc. provides real estate brokerage services in the United States. With the latest financial year loss of US$270m and a trailing-twelve-month loss of US$359m, the US$3.1b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Compass' 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.
View our latest analysis for Compass
Compass is bordering on breakeven, according to the 6 American Real Estate analysts. They expect the company to post a final loss in 2023, before turning a profit of US$129m in 2024. The company is therefore projected to breakeven around 2 years from today. 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 61% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Compass given that this is a high-level summary, however, bear 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’d like to point out is that The company has managed its capital prudently, with debt making up 1.8% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Compass, so if you are interested in understanding the company at a deeper level, take a look at Compass' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:
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Valuation: What is Compass 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 Compass is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Compass’s board and the CEO’s background.
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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.
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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.