Ocwen Financial Corporation's (NYSE:OCN): Ocwen Financial Corporation, a financial services holding company, originates and services loans in the United States, the United States Virgin Islands, India, and Philippines. With the latest financial year loss of -US$72.2m and a trailing-twelve month of -US$180.7m, the US$199m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is OCN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for OCN’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering OCN, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$7.0m in 2021. So, OCN is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, I calculated the rate at which OCN must grow year-on-year. It turns out an average annual growth rate of 96% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving OCN’s growth isn’t the focus of this broad overview, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. OCN currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in OCN’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of OCN to cover in one brief article, but the key fundamentals for the company can all be found in one place – OCN’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:
- Historical Track Record: What has OCN'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 Ocwen Financial’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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.