With the business potentially at an important milestone, we thought we'd take a closer look at Metro Bank Holdings PLC's (LON:MTRO) future prospects. Metro Bank Holdings PLC operates as the bank holding company for Metro Bank PLC that provides various banking products and services in the United Kingdom. On 31 December 2022, the UK£207m market-cap company posted a loss of UK£73m for its most recent financial year. The most pressing concern for investors is Metro Bank Holdings' 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.
See our latest analysis for Metro Bank Holdings
According to the 5 industry analysts covering Metro Bank Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£9.9m 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 80% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Metro Bank Holdings' upcoming projects, however, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Metro Bank Holdings currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Metro Bank Holdings' case is 87%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Metro Bank Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Metro Bank Holdings, take a look at Metro Bank Holdings' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
-
Valuation: What is Metro Bank Holdings 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 Metro Bank Holdings is currently mispriced by the market.
-
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Metro Bank Holdings’s board and the CEO’s background.
-
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.