Loss-Making Metrovacesa S.A. (BME:MVC) Set To Breakeven

We feel now is a pretty good time to analyse Metrovacesa S.A.'s (BME:MVC) business as it appears the company may be on the cusp of a considerable accomplishment. Metrovacesa S.A. operates as a real estate development company in Spain. The €931m market-cap company posted a loss in its most recent financial year of €4.5m and a latest trailing-twelve-month loss of €87m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Metrovacesa's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Metrovacesa

Metrovacesa is bordering on breakeven, according to the 4 Spanish Real Estate analysts. They expect the company to post a final loss in 2020, before turning a profit of €30m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 60%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Metrovacesa's growth isn’t the focus of this broad overview, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 18% 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:

There are key fundamentals of Metrovacesa 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 Metrovacesa, take a look at Metrovacesa's company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Metrovacesa 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 Metrovacesa 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 Metrovacesa’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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