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With the business potentially at an important milestone, we thought we'd take a closer look at AUTO1 Group SE's (ETR:AG1) future prospects. AUTO1 Group SE operates a digital automotive platform for buying and selling used cars online in Europe. The €1.1b market-cap company announced a latest loss of €116m on 31 December 2023 for its most recent financial year result. As path to profitability is the topic on AUTO1 Group's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for AUTO1 Group
According to the 10 industry analysts covering AUTO1 Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of €56m in 2026. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 81% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for AUTO1 Group given that this is a high-level summary, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. AUTO1 Group currently has a debt-to-equity ratio of 129%. Typically, 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 around investing in the loss-making company.
Next Steps:
There are too many aspects of AUTO1 Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – AUTO1 Group's company page on Simply Wall St. We've also put together a list of relevant 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.