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We feel now is a pretty good time to analyse S4 Capital plc's (LON:SFOR) business as it appears the company may be on the cusp of a considerable accomplishment. S4 Capital plc, together with its subsidiaries, provides digital advertising and marketing services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The UK£212m market-cap company announced a latest loss of UK£307m on 31 December 2024 for its most recent financial year result. The most pressing concern for investors is S4 Capital's 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 5 of the British Media analysts is that S4 Capital is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of UK£2.0m in 2026. Therefore, the company is expected 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 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 112% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of S4 Capital's upcoming projects, though, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Check out our latest analysis for S4 Capital
One thing we would like to bring into light with S4 Capital is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in S4 Capital's case is 53%. 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 S4 Capital to cover in one brief article, but the key fundamentals for the company can all be found in one place – S4 Capital's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:
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Valuation: What is S4 Capital 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 S4 Capital 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 S4 Capital’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.