Analysts Are Optimistic We'll See A Profit From Alphaville S.A. (BVMF:AVLL3)

With the business potentially at an important milestone, we thought we'd take a closer look at Alphaville S.A.'s (BVMF:AVLL3) future prospects. Alphaville S.A. engages in residential subdivision activity under the Alphaville brand in Brazil. With the latest financial year loss of R$411m and a trailing-twelve-month loss of R$492m, the R$879m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Alphaville will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Alphaville

Expectations from some of the Brazilian Consumer Durables analysts is that Alphaville is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of R$31m in 2024. Therefore, the company is expected to breakeven roughly 12 months 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 85%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Alphaville's growth isn’t the focus of this broad overview, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Alphaville is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on Alphaville, so if you are interested in understanding the company at a deeper level, take a look at Alphaville's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

1. Valuation: What is Alphaville 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 Alphaville is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Alphaville’s board and the CEO’s background.
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. 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.