OVH Groupe S.A. (EPA:OVH) Is About To Turn The Corner

With the business potentially at an important milestone, we thought we'd take a closer look at OVH Groupe S.A.'s (EPA:OVH) future prospects. OVH Groupe S.A. provides public and private cloud, shared hosting, and dedicated server products and solutions worldwide. The €1.5b market-cap company announced a latest loss of €10m on 31 August 2024 for its most recent financial year result. Many investors are wondering about the rate at which OVH Groupe 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.

See our latest analysis for OVH Groupe

OVH Groupe is bordering on breakeven, according to the 9 French IT analysts. They expect the company to post a final loss in 2024, before turning a profit of €2.6m in 2025. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 89%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for OVH Groupe given that this is a high-level summary, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with OVH Groupe is its debt-to-equity ratio of 180%. Typically, 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 around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on OVH Groupe, so if you are interested in understanding the company at a deeper level, take a look at OVH 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 OVH 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 OVH 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 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.