Yahoo Finance Loss-Making Deliveroo plc (LON:ROO) Expected To Breakeven In The Medium-Term
We feel now is a pretty good time to analyse Deliveroo plc's (LON:ROO) business as it appears the company may be on the cusp of a considerable accomplishment. Deliveroo plc operates an online food delivery platform. The UK£1.7b market-cap company announced a latest loss of UK£243m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Deliveroo will turn a profit, with the big question being “when will the company 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 Deliveroo
Deliveroo is bordering on breakeven, according to the 13 British Hospitality analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of UK£10m in 2025. Therefore, the company is expected to breakeven roughly 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 68%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Deliveroo's upcoming projects, 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.
One thing we’d like to point out is that Deliveroo has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Deliveroo, so if you are interested in understanding the company at a deeper level, take a look at Deliveroo's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is Deliveroo 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 Deliveroo is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Deliveroo’s board and the CEO’s background.
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
