Webuild S.p.A. (BIT:WBD) Could Be Less Than A Year Away From Profitability

Webuild S.p.A. (BIT:WBD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Webuild S.p.A. engages in construction activities worldwide. The company’s loss has recently broadened since it announced a €21m loss in the full financial year, compared to the latest trailing-twelve-month loss of €168m, moving it further away from breakeven. Many investors are wondering about the rate at which Webuild will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Webuild

According to the 3 industry analysts covering Webuild, the consensus is that breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of €136m in 2020. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 46% year-on-year, on average, 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 Webuild given that this is a high-level summary, though, 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.

One thing we would like to bring into light with Webuild is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Webuild to cover in one brief article, but the key fundamentals for the company can all be found in one place – Webuild's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Webuild 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 Webuild 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 Webuild’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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