AUTO1 Group SE (ETR:AG1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. AUTO1 Group SE operates an online marketplace for used vehicle sales to dealers and individual customers in Europe. On 31 December 2022, the €1.5b market-cap company posted a loss of €246m for its most recent financial year. As path to profitability is the topic on AUTO1 Group's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for AUTO1 Group

Consensus from 11 of the German Specialty Retail analysts is that AUTO1 Group is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of €22m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 75% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving AUTO1 Group's growth isn’t the focus of this broad overview, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. AUTO1 Group currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in AUTO1 Group's case is 92%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of AUTO1 Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – AUTO1 Group's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Valuation: What is AUTO1 Group 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 AUTO1 Group 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 AUTO1 Group’s board and the CEO’s background.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here