When Can We Expect A Profit From Diversey Holdings, Ltd. (NASDAQ:DSEY)?
With the business potentially at an important milestone, we thought we'd take a closer look at Diversey Holdings, Ltd.'s (NASDAQ:DSEY) future prospects. Diversey Holdings, Ltd., through its subsidiaries, provides infection prevention and cleaning solutions worldwide. With the latest financial year loss of US$175m and a trailing-twelve-month loss of US$151m, the US$1.7b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Diversey Holdings' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Diversey Holdings
Diversey Holdings is bordering on breakeven, according to the 10 American Chemicals analysts. They expect the company to post a final loss in 2022, before turning a profit of US$52m in 2023. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 110% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Diversey Holdings' growth isn’t the focus of this broad overview, 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 we would like to bring into light with Diversey Holdings is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Diversey Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Diversey Holdings' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:
Valuation: What is Diversey Holdings 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 Diversey Holdings 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 Diversey Holdings’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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