Stock Analysis

Elior Group SA (EPA:ELIOR) About To Shift From Loss To Profit

ENXTPA:ELIOR
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We feel now is a pretty good time to analyse Elior Group SA's (EPA:ELIOR) business as it appears the company may be on the cusp of a considerable accomplishment. Elior Group SA offers contract catering and support services in France and internationally. The €653m market-cap company announced a latest loss of €41m on 30 September 2024 for its most recent financial year result. The most pressing concern for investors is Elior Group'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.

See our latest analysis for Elior Group

Consensus from 8 of the French Hospitality analysts is that Elior Group is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of €25m in 2025. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 76% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ENXTPA:ELIOR Earnings Per Share Growth January 8th 2025

We're not going to go through company-specific developments for Elior Group given that this is a high-level summary, 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. Elior Group currently has a debt-to-equity ratio of 157%. 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 too many aspects of Elior Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Elior Group's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

  1. Valuation: What is Elior Group 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 Elior Group 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 Elior Group’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 here to simplify it.

Discover if Elior Group might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.