IHS Holding Limited (NYSE:IHS) About To Shift From Loss To Profit
With the business potentially at an important milestone, we thought we'd take a closer look at IHS Holding Limited's (NYSE:IHS) future prospects. IHS Holding Limited, together with its subsidiaries, owns, operates, and develops shared telecommunications infrastructure in Africa, Latin America, Europe, and the Middle East. The US$3.6b market-cap company announced a latest loss of US$26m on 31 December 2021 for its most recent financial year result. Many investors are wondering about the rate at which IHS Holding will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for IHS Holding
Consensus from 6 of the American Telecom analysts is that IHS Holding is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$74m in 2022. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 72% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for IHS Holding given that this is a high-level summary, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. IHS Holding currently has a debt-to-equity ratio of 151%. Typically, 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 in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on IHS Holding, so if you are interested in understanding the company at a deeper level, take a look at IHS Holding's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
Valuation: What is IHS Holding 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 IHS Holding 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 IHS Holding’s board and the CEO’s background.
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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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.
