Analysts Are Optimistic We'll See A Profit From Damstra Holdings Limited (ASX:DTC)

With the business potentially at an important milestone, we thought we'd take a closer look at Damstra Holdings Limited's (ASX:DTC) future prospects. Damstra Holdings Limited provides workplace management solutions to various industry segments worldwide. The AU$290m market-cap company announced a latest loss of AU$3.8m on 30 June 2020 for its most recent financial year result. As path to profitability is the topic on Damstra Holdings' 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.

See our latest analysis for Damstra Holdings

Consensus from 4 of the Australian Software analysts is that Damstra Holdings is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$169k in 2021. 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 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% 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.

Given this is a high-level overview, we won’t go into details of Damstra Holdings' upcoming projects, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Damstra Holdings currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Damstra Holdings, so if you are interested in understanding the company at a deeper level, take a look at Damstra Holdings' company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Valuation: What is Damstra 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 Damstra Holdings 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 Damstra Holdings’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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