Moura Dubeux Engenharia S.A.'s (BVMF:MDNE3) Has Found A Path To Profitability

We feel now is a pretty good time to analyse Moura Dubeux Engenharia S.A.'s (BVMF:MDNE3) business as it appears the company may be on the cusp of a considerable accomplishment. Moura Dubeux Engenharia S.A. provides real estate development services in Brazil. The R$768m market-cap company announced a latest loss of R$100m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Moura Dubeux Engenharia's 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.

Check out our latest analysis for Moura Dubeux Engenharia

Consensus from 4 of the Brazilian Real Estate analysts is that Moura Dubeux Engenharia is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of R$66m in 2021. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 77%, which is rather optimistic! 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 Moura Dubeux Engenharia's upcoming projects, though, take into account 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’d like to point out is that The company has managed its capital judiciously, with debt making up 12% 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 Moura Dubeux Engenharia 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 Moura Dubeux Engenharia, take a look at Moura Dubeux Engenharia's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

1. Valuation: What is Moura Dubeux Engenharia 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 Moura Dubeux Engenharia 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 Moura Dubeux Engenharia’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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