FlexShopper, Inc.'s (NASDAQ:FPAY): FlexShopper, Inc., through its wholly owned subsidiary, FlexShopper, LLC operates as an online lease-to-own (LTO) retailer and LTO payment solution provider. The US$15m market-cap company announced a latest loss of -US$11.9m on 31 December 2018 for its most recent financial year result. Many investors are wondering the rate at which FPAY will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for FPAY’s growth and when analysts expect the company to become profitable.
FPAY is bordering on breakeven, according to Diversified Financial analysts. They expect the company to post a final loss in 2019, before turning a profit of US$2.6m in 2020. So, FPAY is predicted to breakeven approximately a couple of months from now! How fast will FPAY have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 94% year-on-year, on average, which is rather optimistic! 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 FPAY given that this is a high-level summary, however, 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 FPAY is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in FPAY’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on FPAY, so if you are interested in understanding the company at a deeper level, take a look at FPAY’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:
- Valuation: What is FPAY 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 FPAY 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 FlexShopper’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.
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