Breakeven Is Near for Archos S.A. (EPA:ALJXR)

With the business potentially at an important milestone, we thought we'd take a closer look at Archos S.A.'s (EPA:ALJXR) future prospects. Archos S.A. manufactures and sells consumer electronics. The company’s loss has recently broadened since it announced a €1.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of €1.7m, moving it further away from breakeven. Many investors are wondering about the rate at which Archos 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.

Check out our latest analysis for Archos

Expectations from some of the French Tech analysts is that Archos is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of €670k in 2024. The company is therefore projected to breakeven around 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 74% 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.

Underlying developments driving Archos' growth isn’t the focus of this broad overview, though, 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.

One thing we would like to bring into light with Archos is its debt-to-equity ratio of over 2x. 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 in investing in the loss-making company.

Next Steps:

There are too many aspects of Archos to cover in one brief article, but the key fundamentals for the company can all be found in one place – Archos' company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Valuation: What is Archos 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 Archos 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 Archos’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com