DXN Limited's (ASX:DXN): DXN Limited designs, builds, owns, and operates data centers and related infrastructure for communications networks in Australia. The AU$22m market-cap company announced a latest loss of -AU$7.4m on 30 June 2019 for its most recent financial year result. Many investors are wondering the rate at which DXN will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for DXN’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering DXN, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$1.0m in 2021. Therefore, DXN is expected to breakeven roughly 2 years from now. What rate will DXN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 99%, 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, I won’t go into details of DXN’s upcoming projects, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I’d like to point out is that DXN has managed its capital prudently, with debt making up 18% of equity. This means that DXN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of DXN 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 DXN, take a look at DXN’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
- Valuation: What is DXN 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 DXN 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 DXN’s board and the CEO’s back ground.
- 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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