Allegro.eu SA (WSE:ALE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Allegro.eu SA operates a go-to commerce platform for consumers in Poland. On 31 December 2020, the zł60b market-cap company posted a loss of zł335m for its most recent financial year. Many investors are wondering about the rate at which Allegro.eu 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.
Allegro.eu is bordering on breakeven, according to the 11 Polish Online Retail analysts. They expect the company to post a final loss in 2020, before turning a profit of zł996m in 2021. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 40% is expected, 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 Allegro.eu's upcoming projects, though, bear in mind that generally 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. Allegro.eu currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Allegro.eu's case is 67%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Allegro.eu which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Allegro.eu, take a look at Allegro.eu's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:
- Valuation: What is Allegro.eu 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 Allegro.eu is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Allegro.eu’s board and the CEO’s background.
- 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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