Diurnal Group plc (LON:DNL) Is Expected To Breakeven In The Near Future

By
Simply Wall St
Published
May 22, 2021
AIM:DNL
Source: Shutterstock

Diurnal Group plc (LON:DNL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Diurnal Group plc operates as a specialty pharma company worldwide. The company’s loss has recently broadened since it announced a UK£4.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£4.7m, moving it further away from breakeven. The most pressing concern for investors is Diurnal Group'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.

See our latest analysis for Diurnal Group

Diurnal Group is bordering on breakeven, according to the 4 British Biotechs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£660k in 2023. Therefore, the company is expected to breakeven roughly 2 years 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 67%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
AIM:DNL Earnings Per Share Growth May 23rd 2021

Given this is a high-level overview, we won’t go into details of Diurnal Group's upcoming projects, however, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 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 too many aspects of Diurnal Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Diurnal Group's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

  1. Historical Track Record: What has Diurnal Group'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 Diurnal 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.