SRP Groupe S.A.'s (EPA:SRP) Profit Outlook

By
Simply Wall St
Published
October 22, 2020
ENXTPA:SRP

SRP Groupe S.A. (EPA:SRP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 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 €113m market-cap company posted a loss in its most recent financial year of €70m and a latest trailing-twelve-month loss of €35m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which SRP Groupe will turn a profit, with the big question being “when will the company breakeven?” 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

According to the 2 industry analysts covering SRP Groupe, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of €1.0m in 2021. The company is therefore projected to breakeven just over a year from now. 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 116%, 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:SRP Earnings Per Share Growth October 22nd 2020

Given this is a high-level overview, we won’t go into details of SRP Groupe's upcoming projects, but, take into account that by and large 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 SRP Groupe is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SRP Groupe's case is 68%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  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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