Breakeven On The Horizon For Ditech Holding Corporation (NYSE:DHCP)
Ditech Holding Corporation’s (NYSE:DHCP): Ditech Holding Corporation operates as a mortgage servicer, asset manager, and portfolio owner. On 31 December 2017, the US$27.47M market-cap posted a loss of -US$426.90M for its most recent financial year. Many investors are wondering the rate at which DHCP will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for DHCP, its year of breakeven and its implied growth rate.
See our latest analysis for Ditech Holding
Expectation from analysts is DHCP is on the verge of breakeven. They anticipate the company to incur a final loss in 2018, before generating positive profits of US$13.00M in 2019. So, DHCP is predicted to breakeven approximately a few months from now. What rate will DHCP have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 103.88%, which signals high confidence from analysts. If this rate turns out to be too aggressive, DHCP may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for DHCP given that this is a high-level summary, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. DHCP currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
There are key fundamentals of DHCP which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at DHCP, take a look at DHCP’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:
Historical Track Record: What has DHCP’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Ditech Holding’s board and the CEO’s back ground.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
