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With the business potentially at an important milestone, we thought we'd take a closer look at NewRiver REIT plc's (LON:NRR) future prospects. NewRiver REIT plc (‘NewRiver’) is a leading Real Estate Investment Trust specialising in buying, managing and developing essential retail and leisure assets throughout the UK. On 31 March 2021, the UK£260m market-cap company posted a loss of UK£151m for its most recent financial year. The most pressing concern for investors is NewRiver REIT's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 3 industry analysts covering NewRiver REIT, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of UK£10m in 2022. 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 102% 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 NewRiver REIT's upcoming projects, however, bear in mind that by and large 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. NewRiver REIT currently has a debt-to-equity ratio of 137%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on NewRiver REIT, so if you are interested in understanding the company at a deeper level, take a look at NewRiver REIT's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
Valuation: What is NewRiver REIT 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 NewRiver REIT 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 NewRiver REIT’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.
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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