AUTO1 Group SE's (ETR:AG1) Path To Profitability

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 operates a digital automotive platform for buying and selling used cars online in Europe. On 31 December 2023, the €1.2b market-cap company posted a loss of €116m for its most recent financial year. As path to profitability is the topic on AUTO1 Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for AUTO1 Group

AUTO1 Group is bordering on breakeven, according to the 10 German Specialty Retail analysts. They expect the company to post a final loss in 2025, before turning a profit of €56m in 2026. So, the company is predicted to breakeven approximately 2 years from now. 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 81% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving AUTO1 Group's growth isn’t the focus of this broad overview, however, keep 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. AUTO1 Group currently has a debt-to-equity ratio of 129%. Generally, the rule of thumb is 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 in investing in the loss-making company.

Next Steps:

There are too many aspects of AUTO1 Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – AUTO1 Group's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

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.