Loss-Making Dignitana AB (publ) (STO:DIGN) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Dignitana AB (publ)'s (STO:DIGN) future prospects. Dignitana AB (publ), a medical technology company, engages in the development, production, and marketing of medical cooling devices in the United States and internationally. The kr68m market-cap company posted a loss in its most recent financial year of kr17m and a latest trailing-twelve-month loss of kr23m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Dignitana 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 Dignitana

Expectations from some of the Swedish Medical Equipment analysts is that Dignitana is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of kr20m in 2026. Therefore, the company is expected to breakeven roughly 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 119%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Dignitana's upcoming projects, though, 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.

Before we wrap up, there’s one issue worth mentioning. Dignitana currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Dignitana's case is 100%. 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 factors 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.