When Will DUG Technology Ltd (ASX:DUG) Become Profitable?

DUG Technology Ltd (ASX:DUG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Dug Technology Ltd, a technology company, provides hardware and software solutions for the technology and resource sectors in Australia, Malaysia, the United States, and the United Kingdom. The AU$92m market-cap company posted a loss in its most recent financial year of US$8.3m and a latest trailing-twelve-month loss of US$10m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which DUG Technology will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for DUG Technology

According to some industry analysts covering DUG Technology, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$500k in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 114% 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.

Underlying developments driving DUG Technology's growth isn’t the focus of this broad overview, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. DUG Technology currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in DUG Technology's case is 57%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on DUG Technology, so if you are interested in understanding the company at a deeper level, take a look at DUG Technology's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Historical Track Record: What has DUG Technology'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 DUG Technology'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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