We feel now is a pretty good time to analyse Accrol Group Holdings plc's (LON:ACRL) business as it appears the company may be on the cusp of a considerable accomplishment. Accrol Group Holdings plc engages in the soft tissue paper converting business in the United Kingdom and Europe. The UK£184m market-cap company announced a latest loss of UK£1.6m on 30 April 2020 for its most recent financial year result. The most pressing concern for investors is Accrol Group Holdings' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 2 of the British Household Products analysts is that Accrol Group Holdings is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of UK£2.2m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% 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 Accrol Group Holdings' upcoming projects, however, 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. Accrol Group Holdings currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Accrol Group Holdings' case is 52%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of Accrol Group Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Accrol Group Holdings' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Valuation: What is Accrol Group Holdings 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 Accrol Group Holdings 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 Accrol Group Holdings’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.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.