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The last four years have been pretty brutal for the Ocado (LSE:OCDO) share price. The online grocery retailer turned robotics firm has seen its market capitalisation steadily collapse by over 90%. And even in 2025, this downward trajectory’s continued with another 20% chopped off since January.
However, with its market-cap shrinking to just shy of £2bn and its latest results reporting a £153.3m underlying profit, the group’s price-to-earnings ratio sits at just 13. That’s reasonably quite cheap for a business that, despite its challenges, is still growing by double-digits with ample liquidity.
So has all this pessimism created a turnaround buying opportunity? And if so, how much money could investors make over the next 12 months if they buy £5,000 worth of shares today?
Robotics investments delivering results
Ocado’s portfolio of automated robot-powered warehouses continues to expand steadily, with three new facilities now operational. And the impact of this was made clear with the groups’ Technology segment revenue growing by 18.1% during the year.
Perhaps what’s more encouraging is the £249m improvement in free cash flow. While Ocado’s still investing heavily in its technology solutions, the company’s inching closer to turning cash flow positive in 2026. And with depreciation and amortisation charges having now peaked, Ocado’s gap between the company’s underlying earnings and reported earnings may start to close.
Improving the quality of its financials would certainly improve investor sentiment surrounding this business. At the same time, cost-saving initiatives helping to reduce expenses along with expected margin improvements from its Technology division could be the key to propelling Ocado shares back in the right direction.
12-month share price forecast
With another seven automated warehouses scheduled to be opened over the next three years, the latest share price consensus target for Ocado sits at 268p. That’s about 12% higher versus today’s share price. And if this projection proves accurate, a £5,000 investment could be worth £5,600 by this time next year. However, this isn’t a guarantee.
Ocado’s track record doesn’t really reflect a company that has managed to consistently meet expectations or its own guidance. In fact, the group’s latest report revealed a much-larger-than-expected loss. And with guidance for 2025 coming in below analyst projections, Ocado’s share price suffered yet another crash in February.
The big question surrounding this enterprise is whether management can indeed deliver on its promise of free cash flow positivity by 2026. Personally, I remain sceptical with cash outflow for 2025, expected to be £200m, down from £223.7m in 2024. If management wants to hit its objective, the company needs to seriously pick up the pace in 2026 – a challenging task.
I can’t deny today’s cheap valuation is tempting. But with other businesses priced at similar levels with a much better track record, I think there are better investment opportunities to consider elsewhere.
