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Quhuo Limited (NASDAQ:QH) On The Verge Of Breaking Even

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Simply Wall St
·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Quhuo Limited's (NASDAQ:QH) future prospects. Quhuo Limited, through its subsidiaries, operates a workforce operational solution platform in the People’s Republic of China. The US$370m market-cap company’s loss lessened since it announced a CN¥12m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥8.3m, as it approaches breakeven. As path to profitability is the topic on Quhuo's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Quhuo

Quhuo is bordering on breakeven, according to the 2 American Commercial Services analysts. They expect the company to post a final loss in 2020, before turning a profit of CN¥23m in 2021. The company is therefore projected to breakeven around 12 months 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 102% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Quhuo's upcoming projects, however, keep 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 26% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Quhuo 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 Quhuo, take a look at Quhuo's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

  1. Historical Track Record: What has Quhuo'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.

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

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.