GVC Holdings PLC (LON:GVC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. GVC Holdings PLC, together with its subsidiaries, operates as an online gaming company in the United Kingdom and internationally. With the latest financial year loss of UK£154m and a trailing-twelve-month loss of UK£156m, the UK£5.3b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is GVC Holdings' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 15 industry analysts covering GVC Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of UK£87m in 2020. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 81%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for GVC Holdings given that this is a high-level summary, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with GVC Holdings is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in GVC Holdings' case is 72%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on GVC Holdings, so if you are interested in understanding the company at a deeper level, take a look at GVC Holdings' company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is GVC Holdings 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 GVC Holdings 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 GVC Holdings’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.
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. 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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