Market Sentiment Around Loss-Making Semperit Aktiengesellschaft Holding (VIE:SEM)

Semperit Aktiengesellschaft Holding's (VIE:SEM): Semperit Aktiengesellschaft Holding develops, produces, and sells rubber and plastic products for the medical and industrial sectors worldwide. The €210m market-cap company’s loss lessens since it announced a -€85.0m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -€48.1m, as it approaches breakeven. Many investors are wondering the rate at which SEM will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for SEM.

View our latest analysis for Semperit Holding

According to the 4 industry analysts covering SEM, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of €5.2m in 2020. SEM is therefore projected to breakeven around a couple of months from now! How fast will SEM have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 103% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, SEM may become profitable much later than analysts predict.

WBAG:SEM Past and Future Earnings, March 12th 2020

I’m not going to go through company-specific developments for SEM given that this is a high-level summary, but, keep in mind that generally 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. SEM currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SEM’s case is 77%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is SEM 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 SEM 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 Semperit Holding’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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