Loungers plc (LON:LGRS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Loungers plc operates cafés, bars, and restaurants under the Lounge and Cosy Club brands in England and Wales. With the latest financial year loss of UK£13m and a trailing-twelve-month loss of UK£11m, the UK£302m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Loungers' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Loungers

According to the 3 industry analysts covering Loungers, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of UK£15m in 2022. The company is therefore projected to breakeven just over a year 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 93% is expected, which signals high confidence from analysts. 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 Loungers given that this is a high-level summary, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 32% 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:

There are too many aspects of Loungers to cover in one brief article, but the key fundamentals for the company can all be found in one place – Loungers' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Loungers 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 Loungers is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Loungers’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.

This article by Simply Wall St is general in nature. 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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