Market Sentiment Around Loss-Making Zur Rose Group AG (VTX:ROSE)

Zur Rose Group AG’s (VTX:ROSE): Zur Rose Group AG operates an e-commerce pharmacy and a wholesale business for medical and pharmaceutical products under the Zur Rose and DocMorris brands in Germany, Switzerland, and rest of Europe. On 31 December 2019, the CHF1.9b market-cap posted a loss of -CHF52.4m for its most recent financial year. As path to profitability is the topic on ROSE’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for ROSE, its year of breakeven and its implied growth rate.

See our latest analysis for Zur Rose Group

Consensus from the 8 Consumer Retailing analysts is ROSE is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of CHF28m in 2022. Therefore, ROSE is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which ROSE must grow year-on-year. It turns out an average annual growth rate of 60% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

SWX:ROSE Past and Future Earnings May 26th 2020
SWX:ROSE Past and Future Earnings May 26th 2020

Given this is a high-level overview, I won’t go into details of ROSE’s upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. ROSE currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ROSE’s case is 79%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of ROSE which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ROSE, take a look at ROSE’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has ROSE’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Zur Rose Group’s board and the CEO’s back ground.
  3. 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. 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. Thank you for reading.