Groupe Tera SA (EPA:ALGTR) Could Be Less Than A Year Away From Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Groupe Tera SA's (EPA:ALGTR) future prospects. Groupe Tera SA develops solutions for real-time monitoring of air quality in France. With the latest financial year loss of €474k and a trailing-twelve-month loss of €738k, the €14m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Groupe Tera 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 Groupe Tera

Groupe Tera is bordering on breakeven, according to some French Electronic analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €640k in 2021. Therefore, the company is expected to breakeven roughly 12 months 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 84%, 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 Groupe Tera given that this is a high-level summary, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Groupe Tera currently has a debt-to-equity ratio of 171%. Typically, 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 key fundamentals of Groupe Tera 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 Groupe Tera, take a look at Groupe Tera's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:

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