Viva Leisure Limited (ASX:VVA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Viva Leisure Limited operates health clubs. On 30 June 2022, the AU$100m market-cap company posted a loss of AU$12m for its most recent financial year. As path to profitability is the topic on Viva Leisure's investors mind, we've decided to gauge market sentiment. 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 Viva Leisure
Consensus from 2 of the Australian Hospitality analysts is that Viva Leisure is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$3.2m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 52% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Viva Leisure's growth isn’t the focus of this broad overview, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 23% 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 Viva Leisure, so if you are interested in understanding the company at a deeper level, take a look at Viva Leisure's company page on Simply Wall St. We've also put together a list of key factors you should further research:
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Valuation: What is Viva Leisure 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 Viva Leisure 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 Viva Leisure’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.