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When Can We Expect A Profit From Pharmasimple SA (EPA:ALPHS)?

Simply Wall St

Pharmasimple SA's (EPA:ALPHS): Pharmasimple SA operates a Website for medicines, cosmetics, and food supplements in Belgium and France. The €17m market-cap posted a loss in its most recent financial year of -€2.4m and a latest trailing-twelve-month loss of -€2.4m shrinking the gap between loss and breakeven. As path to profitability is the topic on ALPHS’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for ALPHS, its year of breakeven and its implied growth rate.

See our latest analysis for Pharmasimple

Expectation from Online Retail analysts is ALPHS is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of €600k in 2021. ALPHS is therefore projected to breakeven around a couple of months from now! How fast will ALPHS 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 102% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, ALPHS may become profitable much later than analysts predict.

ENXTPA:ALPHS Past and Future Earnings, January 29th 2020

Given this is a high-level overview, I won’t go into details of ALPHS’s upcoming projects, however, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. ALPHS currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and ALPHS 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 ALPHS 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 ALPHS, take a look at ALPHS’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should look at:

  1. Valuation: What is ALPHS 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 ALPHS 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 Pharmasimple’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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