Doosan Corporation's (KRX:000150) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Doosan Corporation's (KRX:000150) future prospects. Doosan Corporation operates in the machinery manufacturing, apartment construction, service, and heavy industries in Korea, the United States, Asia, and Europe. On 31 December 2020, the ₩805b market-cap company posted a loss of ₩560b for its most recent financial year. The most pressing concern for investors is Doosan'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 Doosan

According to the 3 industry analysts covering Doosan, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of ₩171b in 2023. So, the company is predicted to breakeven approximately 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 120%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Doosan given that this is a high-level summary, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Doosan currently has a debt-to-equity ratio of 160%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Doosan to cover in one brief article, but the key fundamentals for the company can all be found in one place – Doosan'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 Doosan 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 Doosan 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 Doosan’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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