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AUTO1 Group SE (ETR:AG1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. AUTO1 Group SE, a technology company, operates a digital automotive platform for buying and selling used cars online in Germany, France, Italy, and internationally. With the latest financial year loss of €116m and a trailing-twelve-month loss of €16m, the €4.7b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which AUTO1 Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
AUTO1 Group is bordering on breakeven, according to the 11 German Specialty Retail analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of €62m in 2025. So, the company is predicted to breakeven approximately a year 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 44%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving AUTO1 Group's growth isn’t the focus of this broad overview, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Check out our latest analysis for AUTO1 Group
Before we wrap up, there’s one issue worth mentioning. AUTO1 Group currently has a debt-to-equity ratio of 159%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 key fundamentals of AUTO1 Group 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 AUTO1 Group, take a look at AUTO1 Group's company page on Simply Wall St. We've also put together a list of key factors you should further research:
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Valuation: What is AUTO1 Group 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 AUTO1 Group is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on AUTO1 Group’s board and the CEO’s background.
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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.
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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.