Yahoo Finance De.mem Limited (ASX:DEM) Is About To Turn The Corner
De.mem Limited (ASX:DEM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. De.mem Limited designs, builds, owns, and operates de-centralized water and waste water treatment systems for its customers in industrial, municipal, and residential sectors. The company’s loss has recently broadened since it announced a AU$3.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$3.6m, moving it further away from breakeven. The most pressing concern for investors is De.mem's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for De.mem
Expectations from some of the Australian Water Utilities analysts is that De.mem is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of AU$800k in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving De.mem's growth isn’t the focus of this broad overview, however, bear in mind 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 3.8% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of De.mem to cover in one brief article, but the key fundamentals for the company can all be found in one place – De.mem's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Historical Track Record: What has De.mem's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on De.mem'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. 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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