Safilo Group S.p.A. (BIT:SFL): When Will It Breakeven?

Safilo Group S.p.A.’s (BIT:SFL): Safilo Group S.p.A. engages in the design, production, wholesale, and retail distribution of products for the eyewear market worldwide. With the latest financial year loss of -€32.4m and a trailing-twelve month of -€271.5m, the €306m market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on SFL’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for SFL.

See our latest analysis for Safilo Group

SFL is bordering on breakeven, according to the 4 Luxury analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €4.0m in 2021. So, SFL is predicted to breakeven approximately a few months from now. What rate will SFL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 84%, which is extremely buoyant. If this rate turns out to be too aggressive, SFL may become profitable much later than analysts predict.

BIT:SFL Past and Future Earnings, February 12th 2020
BIT:SFL Past and Future Earnings, February 12th 2020

Given this is a high-level overview, I won’t go into details of SFL’s upcoming projects, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. SFL has managed its capital judiciously, with debt making up 27% of equity. This means that SFL 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 key fundamentals of SFL which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at SFL, take a look at SFL’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:

  1. Valuation: What is SFL 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 SFL 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 Safilo Group’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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