Ecoslops S.A. (EPA:ALESA): When Will It Breakeven?

Ecoslops S.A. (EPA:ALESA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ecoslops S.A. regenerates oil residues into new fuels and light bitumen in France and Portugal. On 31 December 2022, the €3.0m market-cap company posted a loss of €1.8m for its most recent financial year. Many investors are wondering about the rate at which Ecoslops 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.

Check out our latest analysis for Ecoslops

Ecoslops is bordering on breakeven, according to the 2 French Commercial Services analysts. They expect the company to post a final loss in 2023, before turning a profit of €3.5m in 2024. So, the company is predicted to breakeven just over a year 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 85%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Ecoslops' 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. Ecoslops currently has a debt-to-equity ratio of 187%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Ecoslops 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 Ecoslops 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 Ecoslops’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.