Cardno Limited (ASX:CDD) On The Verge Of Breaking Even

With the business potentially at an important milestone, we thought we'd take a closer look at Cardno Limited's (ASX:CDD) future prospects. Cardno Limited, a professional infrastructure and environmental services company, engages in the development and improvement of physical and social infrastructure for communities worldwide. The AU$134m market-cap company announced a latest loss of AU$67m on 30 June 2020 for its most recent financial year result. Many investors are wondering about the rate at which Cardno 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.

See our latest analysis for Cardno

According to some industry analysts covering Cardno, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of AU$22m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 81% year-on-year, on average, which signals high confidence from analysts. 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 Cardno's upcoming projects, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 20% 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 key fundamentals of Cardno which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Cardno, take a look at Cardno's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Valuation: What is Cardno 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 Cardno is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cardno’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. 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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