When Can We Expect A Profit From Delivery Hero SE (ETR:DHER)?

We feel now is a pretty good time to analyse Delivery Hero SE's (ETR:DHER) business as it appears the company may be on the cusp of a considerable accomplishment. Delivery Hero SE offers online food ordering and delivery services. With the latest financial year loss of €2.3b and a trailing-twelve-month loss of €2.2b, the €11b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Delivery Hero's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Delivery Hero

According to the 18 industry analysts covering Delivery Hero, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of €65m in 2026. Therefore, the company is expected to breakeven roughly 2 years 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 114% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Delivery Hero given that this is a high-level summary, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Delivery Hero currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Delivery Hero 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 Delivery Hero 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 Delivery Hero’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.