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Loss-Making Shop Apotheke Europe N.V. (ETR:SAE) Expected To Breakeven

Simply Wall St

Shop Apotheke Europe N.V.'s (ETR:SAE): Shop Apotheke Europe N.V. owns and operates online pharmacies in Germany, Austria, Switzerland, Belgium, the Netherlands, France, Italy, and Spain. The company’s loss has recently broadened since it announced a -€33.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -€40.0m, moving it further away from breakeven. As path to profitability is the topic on SAE’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SAE’s growth and when analysts expect the company to become profitable.

View our latest analysis for Shop Apotheke Europe

SAE is bordering on breakeven, according to the 5 Online Retail analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of €25m in 2022. So, SAE is predicted to breakeven approximately 3 years from today. In order to meet this breakeven date, I calculated the rate at which SAE must grow year-on-year. It turns out an average annual growth rate of 56% is expected, which is rather optimistic! If this rate turns out to be too aggressive, SAE may become profitable much later than analysts predict.

XTRA:SAE Past and Future Earnings, October 4th 2019

I’m not going to go through company-specific developments for SAE given that this is a high-level summary, however, bear in mind that typically 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 SAE is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SAE’s case is 58%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SAE to cover in one brief article, but the key fundamentals for the company can all be found in one place – SAE’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should look at:

  1. Historical Track Record: What has SAE'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 Shop Apotheke Europe’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.