Develop Global Limited (ASX:DVP) Is About To Turn The Corner

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. On 30 June 2023, the AU$665m market-cap company posted a loss of AU$18m for its most recent financial year. 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Develop Global

Develop Global is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2023, before turning a profit of AU$1.0m in 2024. Therefore, the company is expected to breakeven roughly 12 months 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 112% year-on-year, on average, 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, however, keep in mind that typically 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 0.6% 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 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.