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Trainline Plc (LON:TRN) Has Found A Path To Profitability

·2-min read

Trainline Plc (LON:TRN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Trainline Plc operates an independent rail and coach travel platform that sells rail and coach tickets worldwide. The UK£1.4b market-cap company announced a latest loss of UK£12m on 28 February 2022 for its most recent financial year result. Many investors are wondering about the rate at which Trainline 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.

See our latest analysis for Trainline

According to the 10 industry analysts covering Trainline, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£11m in 2023. 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 58%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

We're not going to go through company-specific developments for Trainline given that this is a high-level summary, but, take into account that typically 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 Trainline is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Trainline's case is 52%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Trainline to cover in one brief article, but the key fundamentals for the company can all be found in one place – Trainline's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

  1. Valuation: What is Trainline 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 Trainline 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 Trainline’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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