When Will Dignitana AB (publ) (STO:DIGN) Become Profitable?

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, develops, produces, and markets medical cooling devices in the United States and internationally. The kr258m market-cap company announced a latest loss of kr22m on 31 December 2022 for its most recent financial year result. As path to profitability is the topic on Dignitana's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Dignitana

Expectations from some of the Swedish Medical Equipment analysts is that Dignitana is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr16m in 2024. So, the company is predicted to breakeven just over a year 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 94%, 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. Typically, debt shouldn’t exceed 40% of your equity, which in Dignitana's case is 75%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Dignitana 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 Dignitana, take a look at Dignitana's company page on Simply Wall St. We've also put together a list of key factors you should look at:

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.