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Gladstone Commercial Corporation’s (NASDAQ:GOOD): Gladstone Commercial Corporation is a real estate investment trust focused on acquiring, owning, and operating net leased industrial and office properties across the United States. The US$586m market-cap posted a loss in its most recent financial year of -US$4.9m and a latest trailing-twelve-month loss of -US$3.0m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which GOOD will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for GOOD’s growth and when analysts expect the company to become profitable.
Consensus from the 3 REITs analysts is GOOD is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$2.2m in 2020. Therefore, GOOD is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which GOOD must grow year-on-year. It turns out an average annual growth rate of 38% 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.
Given this is a high-level overview, I won’t go into details of GOOD’s upcoming projects, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I would like to bring into light with GOOD is its debt-to-equity ratio of 163%. Typically, debt shouldn’t exceed 40% of your equity, which in GOOD’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on GOOD, so if you are interested in understanding the company at a deeper level, take a look at GOOD’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:
- Valuation: What is GOOD 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 GOOD 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 Gladstone Commercial’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.