Giglio Group S.p.A.'s (BIT:GG) Path To Profitability

By
Simply Wall St
Published
September 02, 2021
BIT:GG
Source: Shutterstock

We feel now is a pretty good time to analyse Giglio Group S.p.A.'s (BIT:GG) business as it appears the company may be on the cusp of a considerable accomplishment. Giglio Group S.p.A. operates as an e-commerce company in Italy and internationally. The €43m market-cap company announced a latest loss of €2.6m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Giglio Group's path to profitability – when will it 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 Giglio Group

According to the 2 industry analysts covering Giglio Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of €1.0m in 2022. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 98%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
BIT:GG Earnings Per Share Growth September 3rd 2021

We're not going to go through company-specific developments for Giglio Group given that this is a high-level summary, 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 Giglio Group 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 Giglio Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Giglio Group's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

  1. Valuation: What is Giglio Group 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 Giglio Group 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 Giglio Group’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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