Delivery Hero SE’s (ETR:DHER) Path To Profitability

With the business potentially at an important milestone, we thought we’d take a closer look at Delivery Hero SE’s (ETR:DHER) future prospects. Delivery Hero SE offers online food ordering and delivery services. With the latest financial year loss of €2.3b and a trailing-twelve-month loss of €2.2b, the €7.8b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Delivery Hero 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.

Check out our latest analysis for Delivery Hero

Consensus from 18 of the German Hospitality analysts is that Delivery Hero is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of €48m in 2026. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 109% is expected, 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 Delivery Hero’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 issue worth mentioning. Delivery Hero currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

There are key fundamentals of Delivery Hero which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Delivery Hero, take a look at Delivery Hero’s company page on Simply Wall St. We’ve also compiled a list of key aspects you should further research:

1. Valuation: What is Delivery Hero 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 Delivery Hero 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 Delivery Hero’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.