Dotz S.A.'s (BVMF:DOTZ3) Path To Profitability

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. With the latest financial year loss of R$95m and a trailing-twelve-month loss of R$84m, the R$144m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Dotz's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Dotz

According to the 2 industry analysts covering Dotz, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of R$6.2m in 2024. 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 109%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Dotz given that this is a high-level summary, however, keep in mind that by and large 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.

Next Steps:

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 compiled a list of essential aspects you should further examine:

1. 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.
2. 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.
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.