We feel now is a pretty good time to analyse Global Fashion Group S.A.'s (ETR:GFG) business as it appears the company may be on the cusp of a considerable accomplishment. Global Fashion Group S.A. operates e-commerce platforms for fashion and lifestyle markets in the Asia Pacific, Latin America, and the Commonwealth of Independent States. The company’s loss has recently broadened since it announced a €137m loss in the full financial year, compared to the latest trailing-twelve-month loss of €147m, moving it further away from breakeven. Many investors are wondering about the rate at which Global Fashion Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 6 industry analysts covering Global Fashion Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of €26m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 65% year-on-year, on average, 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.
We're not going to go through company-specific developments for Global Fashion Group given that this is a high-level summary, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 2.0% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Global Fashion Group, so if you are interested in understanding the company at a deeper level, take a look at Global Fashion Group's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
- Valuation: What is Global Fashion 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 Global Fashion Group is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Global Fashion Group’s board and the CEO’s background.
- 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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