Naked Wines plc's (LON:WINE) Path To Profitability

We feel now is a pretty good time to analyse Naked Wines plc's (LON:WINE) business as it appears the company may be on the cusp of a considerable accomplishment. Naked Wines plc, together with its subsidiaries, engages in the retailing of wines, beers, and spirits in the United Kingdom, the United States, and Australia. The UK£634m market-cap company announced a latest loss of UK£10m on 29 March 2021 for its most recent financial year result. Many investors are wondering about the rate at which Naked Wines will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Naked Wines

Consensus from 6 of the British Consumer Retailing analysts is that Naked Wines is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£2.9m in 2024. Therefore, the company is expected to breakeven roughly 3 years from today. 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 Naked Wines' upcoming projects, but, take into account that generally 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 The company has managed its capital prudently, with debt making up 0.03% 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 Naked Wines, so if you are interested in understanding the company at a deeper level, take a look at Naked Wines' company page on Simply Wall St. We've also put together a list of key aspects you should look at:

1. Valuation: What is Naked Wines 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 Naked Wines 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 Naked Wines’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.

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.

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