Analysts Are Optimistic We'll See A Profit From Black Diamond Group Limited (TSE:BDI)

We feel now is a pretty good time to analyse Black Diamond Group Limited's (TSE:BDI) business as it appears the company may be on the cusp of a considerable accomplishment. Black Diamond Group Limited rents and sells modular space and workforce accommodation solutions. The CA$211m market-cap company announced a latest loss of CA$3.5m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Black Diamond Group's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Black Diamond Group

Consensus from 5 of the Canadian Commercial Services analysts is that Black Diamond Group is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CA$4.9m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 115% is expected, 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.

Underlying developments driving Black Diamond Group's growth isn’t the focus of this broad overview, though, take into account 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 Black Diamond Group is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Black Diamond Group's case is 78%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Black Diamond Group 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 Black Diamond Group, take a look at Black Diamond Group's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Valuation: What is Black Diamond Group 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 Black Diamond Group 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 Black Diamond Group’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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