Clipper Realty Inc. (NYSE:CLPR): Is Breakeven Near?
Clipper Realty Inc.'s (NYSE:CLPR): Clipper Realty Inc. (NYSE: CLPR) is a self-administered and self-managed real estate company that acquires, owns, manages, operates and repositions multifamily residential and commercial properties in the New York metropolitan area, with a portfolio in Manhattan and Brooklyn. With the latest financial year loss of -US$3.9m and a trailing-twelve month of -US$1.5m, the US$497m market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which CLPR will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CLPR.
See our latest analysis for Clipper Realty
Consensus from the 2 REITs analysts is CLPR is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$12m in 2021. So, CLPR is predicted to breakeven approximately a couple of months from now! How fast will CLPR have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 138% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, CLPR may become profitable much later than analysts predict.
Underlying developments driving CLPR’s growth isn’t the focus of this broad overview, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with CLPR is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in CLPR’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on CLPR, so if you are interested in understanding the company at a deeper level, take a look at CLPR’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
Valuation: What is CLPR 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 CLPR 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 Clipper Realty’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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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