Breakeven Is Near for Telecom Italia S.p.A. (BIT:TIT)

We feel now is a pretty good time to analyse Telecom Italia S.p.A.'s (BIT:TIT) business as it appears the company may be on the cusp of a considerable accomplishment. Telecom Italia S.p.A., together with its subsidiaries, engages in the provision of fixed and mobile telecommunications services in Italy and internationally. With the latest financial year loss of €1.4b and a trailing-twelve-month loss of €1.1b, the €6.1b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Telecom Italia will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Telecom Italia

According to the 9 industry analysts covering Telecom Italia, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of €26m in 2025. 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 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 83% 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.

We're not going to go through company-specific developments for Telecom Italia given that this is a high-level summary, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Telecom Italia currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Telecom Italia's case is 93%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Telecom Italia, so if you are interested in understanding the company at a deeper level, take a look at Telecom Italia's company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:

1. Valuation: What is Telecom Italia 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 Telecom Italia 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 Telecom Italia’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.