Shop Apotheke Europe N.V.'s (ETR:SAE) About To Shift From Loss To Profit

Shop Apotheke Europe N.V. (ETR:SAE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Shop Apotheke Europe N.V. owns and operates online pharmacies in Germany, Belgium, Austria, Switzerland, the Netherlands, France, and Italy. The €2.8b market-cap company posted a loss in its most recent financial year of €17m and a latest trailing-twelve-month loss of €18m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Shop Apotheke Europe's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Shop Apotheke Europe

Consensus from 9 of the German Online Retail analysts is that Shop Apotheke Europe is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of €2.6m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 91% is expected, 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 Shop Apotheke Europe's upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Shop Apotheke Europe is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Shop Apotheke Europe's case is 47%. 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 Shop Apotheke Europe 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 Shop Apotheke Europe, take a look at Shop Apotheke Europe's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Valuation: What is Shop Apotheke Europe 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 Shop Apotheke Europe 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 Shop Apotheke Europe’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. 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.
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