When Can We Expect A Profit From Cadiz Inc. (NASDAQ:CDZI)?

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. On 31 December 2020, the US$457m market-cap company posted a loss of US$38m for its most recent financial year. Many investors are wondering about the rate at which Cadiz will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Cadiz

According to some industry analysts covering Cadiz, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$10m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Cadiz's upcoming projects, but, take into account that by and large 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. Cadiz currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

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 compiled a list of key aspects you should further research:

1. 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.
2. 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.
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. 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.
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