Raiz Invest Limited's (ASX:RZI) Profit Outlook

Simply Wall St
·3-min read

Raiz Invest Limited (ASX:RZI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Raiz Invest Limited provides financial services and products through its mobile micro-investing platform in Australia, Indonesia, and Malaysia. On 30 June 2020, the AU$52m market-cap company posted a loss of AU$4.5m for its most recent financial year. Many investors are wondering about the rate at which Raiz Invest will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Raiz Invest

Expectations from some of the Australian Capital Markets analysts is that Raiz Invest is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$500k in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 99% 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

We're not going to go through company-specific developments for Raiz Invest given that this is a high-level summary, however, keep in mind that typically 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 judiciously, with debt making up 0.8% 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:

This article is not intended to be a comprehensive analysis on Raiz Invest, so if you are interested in understanding the company at a deeper level, take a look at Raiz Invest's company page on Simply Wall St. We've also compiled a list of important factors you should further research:

  1. Historical Track Record: What has Raiz Invest'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 Raiz Invest'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.

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