Cadiz Inc. (NASDAQ:CDZI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Cadiz Inc. operates as a natural resources development company in the United States. With the latest financial year loss of US$38m and a trailing-twelve-month loss of US$35m, the US$148m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Cadiz's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Cadiz is bordering on breakeven, according to some American Water Utilities analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$36m in 2024. Therefore, the company is expected to breakeven roughly 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 65% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Cadiz given that this is a high-level summary, but, bear 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.
One thing we would like to bring into light with Cadiz is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Cadiz's case is 98%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of Cadiz to cover in one brief article, but the key fundamentals for the company can all be found in one place – Cadiz's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:
- Valuation: What is Cadiz 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 Cadiz is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cadiz’s board and the CEO’s background.
- 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.
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.