- Finland
- /
- Construction
- /
- HLSE:SRV1V
Analysts Are Optimistic We'll See A Profit From SRV Yhtiöt Oyj (HEL:SRV1V)
With the business potentially at an important milestone, we thought we'd take a closer look at SRV Yhtiöt Oyj's (HEL:SRV1V) future prospects. SRV Yhtiöt Oyj, a construction company, engages in the development, construction, and commercialization of various projects in Finland, Russia, and Estonia. On 31 December 2020, the €148m market-cap company posted a loss of €23m for its most recent financial year. Many investors are wondering about the rate at which SRV Yhtiöt Oyj will turn a profit, with the big question being “when will the company 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 SRV Yhtiöt Oyj
Consensus from 2 of the Finnish Construction analysts is that SRV Yhtiöt Oyj is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of €4.4m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 97% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving SRV Yhtiöt Oyj's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. SRV Yhtiöt Oyj currently has a debt-to-equity ratio of 138%. Generally, the rule of thumb is 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 in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on SRV Yhtiöt Oyj, so if you are interested in understanding the company at a deeper level, take a look at SRV Yhtiöt Oyj's company page on Simply Wall St. We've also put together a list of important factors you should further research:
- Valuation: What is SRV Yhtiöt Oyj 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 SRV Yhtiöt Oyj 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 SRV Yhtiöt Oyj’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.
If you decide to trade SRV Yhtiöt Oyj, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
About HLSE:SRV1V
SRV Yhtiöt Oyj
A construction company, engages in the development, construction, and commercialization of various projects in Finland, Russia, and Estonia.
Flawless balance sheet and undervalued.