Clipper Realty Inc (NYSE:CLPR) Is Expected To Breakeven
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. The company’s loss has recently broadened since it announced a -US$2.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$5.0m, moving it further away from breakeven. Many investors are wondering the rate at which CLPR 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 CLPR, its year of breakeven and its implied growth rate.
Check out our latest analysis for Clipper Realty
Expectation from REITs analysts is CLPR is on the verge of breakeven. They expect the company to post a final loss in 2018, before turning a profit of US$3.7m in 2019. Therefore, CLPR is expected to breakeven roughly a couple of months from now! How fast will CLPR have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 116% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for CLPR given that this is a high-level summary, though, keep 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.
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 compiled a list of pertinent aspects you should further research:
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.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
