Develop Global Limited (ASX:DVP) About To Shift From Loss To Profit

Develop Global Limited (ASX:DVP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 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$12m and a trailing-twelve-month loss of AU$7.4m, the AU$1.1b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Develop Global 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.

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According to the 2 industry analysts covering Develop Global, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$6.0m in 2025. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 90% is expected, which signals high confidence from analysts. 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, we won’t go into details of Develop Global's upcoming projects, though, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

See our latest analysis for Develop Global

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 39% 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 Develop Global 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 Develop Global, take a look at Develop Global's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

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.