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We feel now is a pretty good time to analyse STS Group AG's (ETR:SF3) business as it appears the company may be on the cusp of a considerable accomplishment. STS Group AG supplies components and systems for the commercial vehicle and automotive industry in Germany, France, Mexico, the United States, and China. The €25m market-cap company announced a latest loss of €600k on 31 December 2024 for its most recent financial year result. The most pressing concern for investors is STS Group'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.
Expectations from some of the German Machinery analysts is that STS Group is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of €1.6m in 2025. The company is therefore projected to breakeven around 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 39%, which signals high confidence from analysts. 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 STS Group's upcoming projects, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Check out our latest analysis for STS Group
Before we wrap up, there’s one issue worth mentioning. STS Group currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in STS Group's case is 56%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of STS Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – STS Group's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
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Valuation: What is STS 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 STS 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 STS 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.