Stock Analysis

Arcure S.A. (EPA:ALCUR): Is Breakeven Near?

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ENXTPA:ALCUR
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With the business potentially at an important milestone, we thought we'd take a closer look at Arcure S.A.'s (EPA:ALCUR) future prospects. Arcure S.A. develops detection solutions for enhancing the autonomy of industrial machinery worldwide. With the latest financial year loss of €2.2m and a trailing-twelve-month loss of €791k, the €12m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Arcure'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.

See our latest analysis for Arcure

According to the 2 industry analysts covering Arcure, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of €1.2m in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 109% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ENXTPA:ALCUR Earnings Per Share Growth December 9th 2022

We're not going to go through company-specific developments for Arcure given that this is a high-level summary, but, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Arcure is its debt-to-equity ratio of 155%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Arcure to cover in one brief article, but the key fundamentals for the company can all be found in one place – Arcure's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

  1. Valuation: What is Arcure 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 Arcure 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 Arcure’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.

Valuation is complex, but we're helping make it simple.

Find out whether Arcure is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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