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The Dixie Group Inc’s (NASDAQ:DXYN) Profit Outlook

Lacy Summers

The Dixie Group Inc’s (NASDAQ:DXYN): The Dixie Group, Inc. manufactures, markets, and sells floorcovering products for residential and commercial applications primarily in the United States. The US$40.00M market-cap posted a loss in its most recent financial year of -US$9.32M and a latest trailing-twelve-month loss of -US$11.63M leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which DXYN will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for DXYN’s growth and when analysts expect the company to become profitable.

See our latest analysis for Dixie Group

DXYN is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2018, before turning a profit of US$4.00M in 2019. Therefore, DXYN is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which DXYN must grow year-on-year. It turns out an average annual growth rate of 59.72% is expected, which is rather optimistic! If this rate turns out to be too aggressive, DXYN may become profitable much later than analysts predict.

NasdaqGM:DXYN Past Future Earnings May 15th 18

I’m not going to go through company-specific developments for DXYN given that this is a high-level summary, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with DXYN is its debt-to-equity ratio of 175.38%. Typically, debt shouldn’t exceed 40% of your equity, which in DXYN’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has DXYN’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dixie Group’s board and the CEO’s back ground.
  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.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.