When Will AUTO1 Group SE (ETR:AG1) Turn A Profit?

We feel now is a pretty good time to analyse AUTO1 Group SE's (ETR:AG1) business as it appears the company may be on the cusp of a considerable accomplishment. AUTO1 Group SE operates a digital automotive platform for buying and selling used cars online in Europe. The €1.1b market-cap company’s loss lessened since it announced a €246m loss in the full financial year, compared to the latest trailing-twelve-month loss of €152m, as it approaches breakeven. As path to profitability is the topic on AUTO1 Group's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for AUTO1 Group

AUTO1 Group is bordering on breakeven, according to the 10 German Specialty Retail analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of €29m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 98%, 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 AUTO1 Group's growth isn’t the focus of this broad overview, but, bear in mind 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 106%. 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 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 compiled a list of pertinent aspects 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.