Analysts Expect Breakeven For Desert Control AS (OB:DSRT) Before Long

Desert Control AS (OB:DSRT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Desert Control AS, a climate technology company, engages in reclaiming degraded soil and turning desert sand into fertile soil. The kr475m market-cap company announced a latest loss of kr90m on 31 December 2022 for its most recent financial year result. The most pressing concern for investors is Desert Control'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.

Check out our latest analysis for Desert Control

According to the 2 industry analysts covering Desert Control, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr13m in 2024. Therefore, the company is expected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 87% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Desert Control's growth isn’t the focus of this broad overview, though, keep in mind that typically 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 Desert Control has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Desert Control 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 Desert Control, take a look at Desert Control's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

1. Historical Track Record: What has Desert Control'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 Control'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.