Loss-Making SRP Groupe S.A. (EPA:SRP) Set To Breakeven

With the business potentially at an important milestone, we thought we'd take a closer look at SRP Groupe S.A.'s (EPA:SRP) future prospects. SRP Groupe S.A. engages in the e-commerce business in France, Belgium, Spain, Italy, Portugal, Poland, the Netherlands, Germany, the United Kingdom, and Morocco. The €426m market-cap company’s loss lessened since it announced a €70m loss in the full financial year, compared to the latest trailing-twelve-month loss of €35m, as it approaches breakeven. As path to profitability is the topic on SRP Groupe'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 SRP Groupe

SRP Groupe is bordering on breakeven, according to some French Online Retail analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €18m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 81% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of SRP Groupe's upcoming projects, however, bear 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. SRP Groupe currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SRP Groupe's case is 68%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on SRP Groupe, so if you are interested in understanding the company at a deeper level, take a look at SRP Groupe's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is SRP Groupe 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 SRP Groupe 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 SRP Groupe’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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