We Might See A Profit From Dingdong (Cayman) Limited (NYSE:DDL) Soon

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$262m market-cap company’s loss lessened since it announced a CN¥814m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥47m, as it approaches 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.

See our latest analysis for Dingdong (Cayman)

According to the 6 industry analysts covering Dingdong (Cayman), the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of CN¥48m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 98%, which signals high confidence from analysts. 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 Dingdong (Cayman)'s upcoming projects, but, take into account that typically 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. Dingdong (Cayman) currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Dingdong (Cayman) 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 Dingdong (Cayman), take a look at Dingdong (Cayman)'s company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

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.