Redfin Corporation's (NASDAQ:RDFN) Profit Outlook

Redfin Corporation's (NASDAQ:RDFN) Profit Outlook

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Redfin Corporation (NASDAQ:RDFN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Redfin Corporation operates as a real estate brokerage company in the United States and Canada. With the latest financial year loss of US$80.8m and a trailing-twelve-month loss of US$69.0m, the US$4.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Redfin’s path to profitability – when will it breakeven? We’ve put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.” data-reactid=”28″>Redfin Corporation (NASDAQ:RDFN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Redfin Corporation operates as a real estate brokerage company in the United States and Canada. With the latest financial year loss of US$80.8m and a trailing-twelve-month loss of US$69.0m, the US$4.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Redfin’s path to profitability – when will it breakeven? We’ve put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" View our latest analysis for Redfin ” data-reactid=”29″> View our latest analysis for Redfin

According to the 16 industry analysts covering Redfin, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$48m in 2023. Therefore, the company is expected to breakeven roughly 3 years from today. 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 57%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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earnings-per-share-growth

Underlying developments driving Redfin’s growth isn’t the focus of this broad overview, though, take into account 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 issue worth mentioning. Redfin currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Redfin’s case is 43%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This article is not intended to be a comprehensive analysis on Redfin, so if you are interested in understanding the company at a deeper level, take a look at Redfin’s company page on Simply Wall St. We’ve also compiled a list of pertinent aspects you should further examine:” data-reactid=”50″>This article is not intended to be a comprehensive analysis on Redfin, so if you are interested in understanding the company at a deeper level, take a look at Redfin’s company page on Simply Wall St. We’ve also compiled a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has Redfin’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 Redfin’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.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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@simplywallst.com.” data-reactid=”55″>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@simplywallst.com.

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