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Breakeven On The Horizon For iStar Inc. (NYSE:STAR)

With the business potentially at an important milestone, we thought we'd take a closer look at iStar Inc.'s (NYSE:STAR) future prospects. iStar Inc. (NYSE: STAR) is focused on reinventing the ground lease sector, unlocking value for real estate owners throughout the country by providing modern, more efficient ground leases on all types of properties. On 31 December 2022, the US$599m market-cap company posted a loss of US$221m for its most recent financial year. Many investors are wondering about the rate at which iStar will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for iStar

iStar is bordering on breakeven, according to some American REITs analysts. They expect the company to post a final loss in 2023, before turning a profit of US$26m in 2024. Therefore, the company is expected to breakeven just over a year 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 119% 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

Underlying developments driving iStar's growth isn’t the focus of this broad overview, but, 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.

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Before we wrap up, there’s one issue worth mentioning. iStar currently has a debt-to-equity ratio of 118%. 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 in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is iStar worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether iStar is currently mispriced by the market.

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

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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