Distribution Finance Capital Holdings plc (LON:DFCH): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we’d take a closer look at Distribution Finance Capital Holdings plc’s (LON:DFCH) future prospects. Distribution Finance Capital Holdings plc operates as a specialized finance company in the United Kingdom. On 31 December 2020, the UK£109m market-cap company posted a loss of UK£14m for its most recent financial year. As path to profitability is the topic on Distribution Finance Capital Holdings’ investors mind, we’ve decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Distribution Finance Capital Holdings

According to the 2 industry analysts covering Distribution Finance Capital Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£4.5m in 2022. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 77{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We’re not going to go through company-specific developments for Distribution Finance Capital Holdings given that this is a high-level summary, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up -0.5{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} 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.

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Next Steps:

This article is not intended to be a comprehensive analysis on Distribution Finance Capital Holdings, so if you are interested in understanding the company at a deeper level, take a look at Distribution Finance Capital Holdings’ company page on Simply Wall St. We’ve also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has Distribution Finance Capital 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 Distribution Finance Capital 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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