We feel now is a pretty good time to analyse Funding Circle Holdings plc's (LON:FCH) business as it appears the company may be on the cusp of a considerable accomplishment. Funding Circle Holdings plc, together with its subsidiaries, provides online lending platforms in the United Kingdom, the United States, and internationally. On 31 December 2020, the UK£482m market-cap company posted a loss of UK£108m for its most recent financial year. Many investors are wondering about the rate at which Funding Circle Holdings will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Funding Circle Holdings

According to the 4 industry analysts covering Funding Circle Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of UK£24m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 92%, 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 Funding Circle Holdings' growth isn’t the focus of this broad overview, though, bear 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 we would like to bring into light with Funding Circle Holdings is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Funding Circle Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Funding Circle Holdings' company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Historical Track Record: What has Funding Circle Holdings' 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 Funding Circle Holdings' 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.

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