Desert Mountain Energy Corp. (CVE:DME) Is Expected To Breakeven In The Near Future

With the business potentially at an important milestone, we thought we'd take a closer look at Desert Mountain Energy Corp.'s (CVE:DME) future prospects. Desert Mountain Energy Corp. engages in the exploration and development of oil and gas, helium, natural gas, hydrogen, and mineral properties in the Southwestern United States. The CA$17m market-cap company posted a loss in its most recent financial year of CA$4.6m and a latest trailing-twelve-month loss of CA$4.1m shrinking the gap between loss and breakeven. As path to profitability is the topic on Desert Mountain Energy'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.

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According to some industry analysts covering Desert Mountain Energy, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of CA$4.3m in 2026. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 166% year-on-year, on average, which signals high confidence from analysts. 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 Desert Mountain Energy given that this is a high-level summary, however, bear in mind that by and large a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Check out our latest analysis for Desert Mountain Energy

One thing we’d like to point out is that Desert Mountain Energy has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of Desert Mountain Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Desert Mountain Energy's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

1. Historical Track Record: What has Desert Mountain Energy'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 Desert Mountain Energy'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.