When Can We Expect A Profit From Desert Control AS (OB:DSRT)?

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 engages in reclaiming degraded soil and turning sand into fertile soil. With the latest financial year loss of kr90m and a trailing-twelve-month loss of kr100m, the kr448m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Desert Control will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See 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 2024, before generating positive profits of kr23m in 2025. So, the company is predicted to breakeven approximately 2 years from today. 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 74%, which is rather optimistic! 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 Control given that this is a high-level summary, however, keep in mind 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’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 typically has high 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 too many aspects of Desert Control to cover in one brief article, but the key fundamentals for the company can all be found in one place – Desert Control's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

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.