With the business potentially at an important milestone, we thought we'd take a closer look at Dotz S.A.'s (BVMF:DOTZ3) future prospects. Dotz S.A. engages in the loyalty program business in Brazil. The R$415m market-cap company’s loss lessened since it announced a R$63m loss in the full financial year, compared to the latest trailing-twelve-month loss of R$55m, as it approaches breakeven. The most pressing concern for investors is Dotz's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Dotz is bordering on breakeven, according to the 3 Brazilian Interactive Media and Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of R$42m in 2023. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 115%, 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 Dotz's upcoming projects, but, 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 would like to bring into light with Dotz is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
There are key fundamentals of Dotz 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 Dotz, take a look at Dotz's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:
- Valuation: What is Dotz 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 Dotz is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dotz’s board and the CEO’s background.
- 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.