medondo holding AG's (ETR:AMI) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at medondo holding AG's (ETR:AMI) future prospects. medondo holding AG, provides service solutions in Germany. On 31 December 2023, the €16m market-cap company posted a loss of €4.3m for its most recent financial year. The most pressing concern for investors is medondo holding's 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.

See our latest analysis for medondo holding

Expectations from some of the German IT analysts is that medondo holding is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of €200k in 2026. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 72%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of medondo holding's upcoming projects, but, 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 28% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on medondo holding, so if you are interested in understanding the company at a deeper level, take a look at medondo holding's company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:

1. Valuation: What is medondo holding 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 medondo holding 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 medondo holding’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.

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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.

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