OVH Groupe S.A. (EPA:OVH) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse OVH Groupe S.A.'s (EPA:OVH) business as it appears the company may be on the cusp of a considerable accomplishment. OVH Groupe SAS provides public and private cloud, shared hosting, and dedicated server products and solutions worldwide. The €2.2b market-cap company announced a latest loss of €29m on 31 August 2022 for its most recent financial year result. The most pressing concern for investors is OVH Groupe's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for OVH Groupe

OVH Groupe is bordering on breakeven, according to the 10 French IT analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of €9.3m in 2023. So, the company is predicted to breakeven approximately a year 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 89% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for OVH Groupe given that this is a high-level summary, however, 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.

Before we wrap up, there’s one issue worth mentioning. OVH Groupe currently has a debt-to-equity ratio of 120%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 OVH Groupe to cover in one brief article, but the key fundamentals for the company can all be found in one place – OVH Groupe's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

1. Historical Track Record: What has OVH Groupe's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on OVH 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. 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.