Adolfo Domínguez, S.A. (BME:ADZ) Is Expected To Breakeven In The Near Future

We feel now is a pretty good time to analyse Adolfo Domínguez, S.A.'s (BME:ADZ) business as it appears the company may be on the cusp of a considerable accomplishment. Adolfo Domínguez, S.A. engages in the design, manufacture, acquisition, sale, wholesale marketing, import, and export of ready-made clothing, footwear, handbags and accessories, household linens, furniture products, and decorative objects. The €42m market-cap company posted a loss in its most recent financial year of €8.3m and a latest trailing-twelve-month loss of €17m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Adolfo Domínguez'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.

View our latest analysis for Adolfo Domínguez

According to some industry analysts covering Adolfo Domínguez, breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of €1.1m in 2023. So, the company is predicted to breakeven approximately 3 years from today. 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 109%, which is extremely buoyant. 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 Adolfo Domínguez given that this is a high-level summary, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up -49% 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.

Next Steps:

This article is not intended to be a comprehensive analysis on Adolfo Domínguez, so if you are interested in understanding the company at a deeper level, take a look at Adolfo Domínguez's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:

1. Valuation: What is Adolfo Domínguez 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 Adolfo Domínguez 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 Adolfo Domínguez’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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