Breakeven Is Near for Dignitana AB (publ) (STO:DIGN)

We feel now is a pretty good time to analyse Dignitana AB (publ)'s (STO:DIGN) business as it appears the company may be on the cusp of a considerable accomplishment. Dignitana AB (publ), a medical technology company, engages in the development, production, and marketing of medical cooling devices in the United States and internationally. On 31 December 2023, the kr145m market-cap company posted a loss of kr17m for its most recent financial year. The most pressing concern for investors is Dignitana'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 Dignitana

According to some industry analysts covering Dignitana, breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr3.0m in 2024. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 139% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Dignitana's growth isn’t the focus of this broad overview, but, take into account 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. Dignitana currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Dignitana to cover in one brief article, but the key fundamentals for the company can all be found in one place – Dignitana's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

1. Valuation: What is Dignitana 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 Dignitana 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 Dignitana’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.