With the business potentially at an important milestone, we thought we'd take a closer look at Dingdong (Cayman) Limited's (NYSE:DDL) future prospects. Dingdong (Cayman) Limited operates an e-commerce company in China. The US$392m market-cap company’s loss lessened since it announced a CN¥814m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥389m, as it approaches breakeven. Many investors are wondering about the rate at which Dingdong (Cayman) 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.
According to the 7 industry analysts covering Dingdong (Cayman), the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥178m in 2024. The company is therefore projected to breakeven just over a year from now. 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 112%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Dingdong (Cayman)'s upcoming projects, but, take into account that typically 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. Dingdong (Cayman) currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of Dingdong (Cayman) to cover in one brief article, but the key fundamentals for the company can all be found in one place – Dingdong (Cayman)'s company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:
Valuation: What is Dingdong (Cayman) 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 Dingdong (Cayman) 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 Dingdong (Cayman)’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.
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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.