We feel now is a pretty good time to analyse Braemar Hotels & Resorts Inc.'s (NYSE:BHR) business as it appears the company may be on the cusp of a considerable accomplishment. Braemar Hotels & Resorts is a real estate investment trust (REIT) focused on investing in luxury hotels and resorts. The US$333m market-cap company’s loss lessened since it announced a US$40m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$18m, as it approaches breakeven. The most pressing concern for investors is Braemar Hotels & Resorts' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 4 of the American REITs analysts is that Braemar Hotels & Resorts is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$584k in 2022. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 69% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Braemar Hotels & Resorts' 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.
One thing we would like to bring into light with Braemar Hotels & Resorts is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of Braemar Hotels & Resorts which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Braemar Hotels & Resorts, take a look at Braemar Hotels & Resorts' company page on Simply Wall St. We've also put together a list of key factors you should look at:
Valuation: What is Braemar Hotels & Resorts 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 Braemar Hotels & Resorts is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Braemar Hotels & Resorts’s board and the CEO’s background.
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.