Analysts Expect Breakeven For Dingdong (Cayman) Limited (NYSE:DDL) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at Dingdong (Cayman) Limited's (NYSE:DDL) future prospects. Dingdong (Cayman) Limited operates an e-commerce company in China. The US$1.0b market-cap company posted a loss in its most recent financial year of CN¥6.7b and a latest trailing-twelve-month loss of CN¥2.0b shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Dingdong (Cayman) 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.

Our analysis indicates that DDL is potentially undervalued!

Dingdong (Cayman) is bordering on breakeven, according to the 8 American Consumer Retailing analysts. They expect the company to post a final loss in 2023, before turning a profit of CN¥496m in 2024. So, the company is predicted to breakeven approximately 2 years from now. 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 95% 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 Dingdong (Cayman)'s growth isn’t the focus of this broad overview, but, bear in mind that typically 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. Dingdong (Cayman) currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Dingdong (Cayman) to cover in one brief article, but the key fundamentals for the company can all be found in one place – Dingdong (Cayman)'s company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:

1. Valuation: What is Dingdong (Cayman) 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 Dingdong (Cayman) 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 Dingdong (Cayman)’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.