Analysts Expect Breakeven For Sezzle Inc. (ASX:SZL) Before Long

By

Simply Wall St

Published

December 20, 2020

We feel now is a pretty good time to analyse Sezzle Inc.'s (ASX:SZL) business as it appears the company may be on the cusp of a considerable accomplishment. Sezzle Inc. provides a payments platform that facilitates payments between consumers and retailers the United States and Canada. With the latest financial year loss of US$17m and a trailing-twelve-month loss of US$20m, the AU$1.2b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Sezzle's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Sezzle

Sezzle is bordering on breakeven, according to the 3 Australian IT analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$3.9m in 2021. Therefore, the company is expected to breakeven just over a year 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 68%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:SZL Earnings Per Share Growth December 21st 2020

Underlying developments driving Sezzle's growth isn’t the focus of this broad overview, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Sezzle currently has a debt-to-equity ratio of 184%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Sezzle'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 Sezzle'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.