What's The Market Sentiment Around Loss-Making GVC Holdings PLC (LON:GVC)?

Simply Wall St
February 27, 2018
Source: Shutterstock

GVC Holdings PLC's (LSE:GVC): GVC Holdings PLC, together with its subsidiaries, operates as an online gaming company in Germany, the United Kingdom, Turkey, and internationally. With the latest financial year loss of -€138.30M and a trailing-twelve month of -€61.60M, the UK£2.77B market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on GVC’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for GVC, its year of breakeven and its implied growth rate.

Check out our latest analysis for GVC Holdings

Expectation from analysts is GVC is on the verge of breakeven. They anticipate the company to incur a final loss in 2014, before generating positive profits of €30.10M in 2015. Therefore, GVC is expected to breakeven roughly a couple of months from now! How fast will GVC have to grow each year in order to reach the breakeven point by 2015? Working backwards from analyst estimates, it turns out that they expect the company to grow 73.58% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

LSE:GVC Past Future Earnings Feb 27th 18
LSE:GVC Past Future Earnings Feb 27th 18

Given this is a high-level overview, I won’t go into detail the detail of GVC’s upcoming projects, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. GVC has managed its capital judiciously, with debt making up 18.61% of equity. This means that GVC has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is GVC 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 GVC 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 GVC Holdings’s board and the CEO’s back ground.
  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.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.