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LendingClub Corporation's (NYSE:LC): LendingClub Corporation provides unsecured personal loans in the United States. With the latest financial year loss of -US$30.7m and a trailing-twelve month of -US$106.3m, the US$345m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is LC’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for LC.
According to the 11 industry analysts covering LC, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$3.1m in 2021. Therefore, LC is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which LC must grow year-on-year. It turns out an average annual growth rate of 94% is expected, 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 LC given that this is a high-level summary, however, take into account that typically 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 LC is its debt-to-equity ratio of 104%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in LC’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on LC, so if you are interested in understanding the company at a deeper level, take a look at LC’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:
Historical Track Record: What has LC'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on LendingClub’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.
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. 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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