Pharmasimple SA’s (EPA:ALPHS): Pharmasimple SA operates a Website for medicines, cosmetics, and food supplements in Belgium and France. The €17m market-cap posted a loss in its most recent financial year of -€2.4m and a latest trailing-twelve-month loss of -€2.4m shrinking the gap between loss and breakeven. As path to profitability is the topic on ALPHS’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for ALPHS’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering ALPHS, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of €600k in 2021. So, ALPHS is predicted to breakeven approximately a few months from now. What rate will ALPHS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 102%, which is rather optimistic! If this rate turns out to be too aggressive, ALPHS may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of ALPHS’s upcoming projects, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with ALPHS is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in ALPHS’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on ALPHS, so if you are interested in understanding the company at a deeper level, take a look at ALPHS’s company page on Simply Wall St. I’ve also compiled a list of key factors you should look at:
- Valuation: What is ALPHS 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 ALPHS is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Pharmasimple’s board and the CEO’s back ground.
- 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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