Viva Leisure Limited (ASX:VVA) Could Be Less Than A Year Away From Profitability
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. The AU$105m market-cap company announced a latest loss of AU$12m on 30 June 2022 for its most recent financial year result. 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.
See our latest analysis for Viva Leisure
According to the 2 industry analysts covering Viva Leisure, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of AU$2.1m in 2023. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 54% 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.
Given this is a high-level overview, we won’t go into details of Viva Leisure's upcoming projects, however, bear in mind that typically 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 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:
There are too many aspects of Viva Leisure to cover in one brief article, but the key fundamentals for the company can all be found in one place – Viva Leisure's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
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.
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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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