We Might See A Profit From Develop Global Limited (ASX:DVP) Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Develop Global Limited's (ASX:DVP) future prospects. Develop Global Limited, together with its subsidiaries, engages in the exploration and development of mineral resource properties in Australia. With the latest financial year loss of AU$18m and a trailing-twelve-month loss of AU$15m, the AU$553m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Develop Global's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Develop Global

Consensus from 2 of the Australian Metals and Mining analysts is that Develop Global is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$1.5m in 2024. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 125% 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 Develop Global's growth isn’t the focus of this broad overview, though, bear in mind that by and large a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 2.6% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Develop Global to cover in one brief article, but the key fundamentals for the company can all be found in one place – Develop Global's company page on Simply Wall St. We've also compiled a list of key factors you should further research:

1. Historical Track Record: What has Develop Global'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 Develop Global's board and the CEO’s background.
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.

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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.