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Breakeven On The Horizon For Deutsche Bank Aktiengesellschaft (ETR:DBK)

Simply Wall St

Deutsche Bank Aktiengesellschaft's (ETR:DBK): Deutsche Bank Aktiengesellschaft provides commercial and investment banking, retail banking, transaction banking, and asset and wealth management products and services to corporations, governments, institutional investors, small and medium-sized businesses, and private individuals worldwide. The company’s loss has recently broadened since it announced a -€25.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of -€4.6b, moving it further away from breakeven. As path to profitability is the topic on DBK’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for DBK, its year of breakeven and its implied growth rate.

View our latest analysis for Deutsche Bank

DBK is bordering on breakeven, according to the 18 Capital Markets analysts. They expect the company to post a final loss in 2020, before turning a profit of €752m in 2021. So, DBK is predicted to breakeven approximately 2 years from now. How fast will DBK have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 100% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, DBK may become profitable much later than analysts predict.

XTRA:DBK Past and Future Earnings, November 24th 2019

Given this is a high-level overview, I won’t go into details of DBK’s upcoming projects, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with DBK is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and DBK has considerably exceeded this. 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 key fundamentals of DBK which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at DBK, take a look at DBK’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:

  1. Historical Track Record: What has DBK's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Deutsche Bank’s board and the CEO’s back ground.
  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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