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Harmoney Corp Limited (ASX:HMY): When Will It Breakeven?

·3 min read

Harmoney Corp Limited (ASX:HMY) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Harmoney Corp Limited provides online unsecured personal loans in Australia and New Zealand. The AU$66m market-cap company announced a latest loss of NZ$20m on 30 June 2022 for its most recent financial year result. The most pressing concern for investors is Harmoney's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Harmoney

Harmoney is bordering on breakeven, according to the 2 Australian Consumer Finance analysts. They expect the company to post a final loss in 2024, before turning a profit of NZ$8.5m in 2025. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 80% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Harmoney's upcoming projects, however, take into account that typically 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. Harmoney currently has a debt-to-equity ratio of over 2x. 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 around investing in the loss-making company.

Next Steps:

There are too many aspects of Harmoney to cover in one brief article, but the key fundamentals for the company can all be found in one place – Harmoney's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

  1. Historical Track Record: What has Harmoney'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Harmoney's board and the CEO’s background.

  3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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