Basic-Fit N.V. (AMS:BFIT) On The Verge Of Breaking Even

Basic-Fit N.V. (AMS:BFIT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Basic-Fit N.V., together with its subsidiaries, engages in the operation of fitness clubs. On 31 December 2022, the €2.3b market-cap company posted a loss of €3.7m for its most recent financial year. As path to profitability is the topic on Basic-Fit's investors mind, we've decided to gauge market sentiment. 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 Basic-Fit

Consensus from 6 of the Dutch Hospitality analysts is that Basic-Fit is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of €76m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 53% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Basic-Fit's upcoming projects, however, bear in mind that typically 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. Basic-Fit currently has a debt-to-equity ratio of 182%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Basic-Fit to cover in one brief article, but the key fundamentals for the company can all be found in one place – Basic-Fit's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is Basic-Fit 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 Basic-Fit 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 Basic-Fit’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.