Market Sentiment Around Loss-Making Conduit Holdings Limited (LON:CRE)

Conduit Holdings Limited (LON:CRE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Conduit Holdings Limited, together with its subsidiaries, engages in the reinsurance business in Bermuda and internationally. The company’s loss has recently broadened since it announced a US$42m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$91m, moving it further away from breakeven. Many investors are wondering about the rate at which Conduit Holdings 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.

View our latest analysis for Conduit Holdings

Consensus from 6 of the British Insurance analysts is that Conduit Holdings is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$109m in 2023. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 53%, 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

Given this is a high-level overview, we won’t go into details of Conduit Holdings' upcoming projects, but, 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 we’d like to point out is that Conduit Holdings has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Conduit Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Conduit Holdings, take a look at Conduit Holdings' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:

1. Valuation: What is Conduit Holdings 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 Conduit Holdings is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Conduit Holdings’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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