Discovering the very best shares to purchase is rarely a straightforward process. And whereas there are many promising progress tales to capitalise on at the moment, most gained’t stay up to expectations. One firm that falls into that class for me proper now’s Ocado Group (LSE:OCDO).

My views on this enterprise have soured through the years because the true value of its robotic automated warehouse expertise emerged. And whereas important income progress has lastly began to materialise, there are nonetheless some notable query marks surrounding this enterprise.

Digging into the small print the entire thing

Ocado’s finest often called a web based grocery retailer. Nonetheless, for a number of years now, administration has been steadily transitioning the enterprise right into a robotics enterprise. Firms can now use its expertise to automate the preparation of buyer orders inside a warehouse, which Ocado calls Buyer Fulfilment Centres (CFCs).

As per the most recent outcomes, there are presently 25 CFCs working underneath Ocado’s ecosystem, with a minimal of seven extra anticipated to be added over the following three years. If the whole lot goes in response to plan, the agency’s current record-breaking £3.2bn of income might be simply the tip of the iceberg.

Evidently, that sounds relatively promising. Nonetheless, digging deeper, I’m sceptical administration will reach assembly its targets on time.

The agency already has a blended historical past of delivering on its acknowledged targets. And among the deliberate CFC openings are merely present initiatives which were delayed. On the identical time, a number of of its key prospects seem to have a lukewarm reception to the expertise.

Within the US, Kroger’s already slowed the tempo of deploying Ocado’s robots. In the meantime, in Canada, Sobeys has paused its adoption plans indefinitely. That’s regardless of each corporations reporting robust gross sales progress. Within the meantime, Ocado’s losses stay substantial, touchdown at £374.3m in 2024 after already burning by means of £387m in 2023.

As such, regardless of delivering file top-line progress, Ocado shares tumbled by roughly one other 20% on the again of its newest earnings, dragging its 12-month efficiency to -42%.

Trying on the brilliant aspect

Regardless of the negatives, Ocado’s newest outcomes did have some welcome vibrant spots. Whereas earnings have numerous room for enchancment, the group’s underlying money outflow was successfully slashed in half, falling from £472.5m to £223.7m.

Administration attributes this success to greater EBITDA margins and improved capital expenditure. And this optimistic pattern is predicted to proceed over the following two years, coming into the black earlier than the tip of 2026.

Suppose the agency’s profitable in hitting this goal? In that case, the improved monetary flexibility will give administration some much-needed respiration house by way of managing its debt burden. To not point out, it paves the way in which for reaching profitability.

Contemplating the comparatively low price level at which shares are presently buying and selling, at the moment’s valuation might current an distinctive shopping for alternative. Nonetheless, that’s all depending on administration hitting its targets. And as beforehand acknowledged, Ocado’s poor monitor file doesn’t precisely fill me with confidence.

That’s why, regardless of the potential, this enterprise isn’t becoming a member of my ‘best stocks to buy’ listing. No less than, not till I see extra progress.