AUTO1 Group SE (ETR:AG1): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at AUTO1 Group SE's (ETR:AG1) future prospects. AUTO1 Group SE, a technology company, operates a digital automotive platform for buying and selling used cars online in Germany, France, Italy, and internationally. The €3.4b market-cap company’s loss lessened since it announced a €116m loss in the full financial year, compared to the latest trailing-twelve-month loss of €16m, as it approaches breakeven. The most pressing concern for investors is AUTO1 Group's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for AUTO1 Group

According to the 11 industry analysts covering AUTO1 Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of €19m in 2025. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 135% 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.

Given this is a high-level overview, we won’t go into details of AUTO1 Group's upcoming projects, but, take into account that generally 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 AUTO1 Group is its debt-to-equity ratio of 159%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of AUTO1 Group which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at AUTO1 Group, take a look at AUTO1 Group's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Valuation: What is AUTO1 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 AUTO1 Group 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 AUTO1 Group’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.