DUG Technology Ltd (ASX:DUG) Could Be Less Than A Year Away From Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at DUG Technology Ltd's (ASX:DUG) future prospects. Dug Technology Ltd, a technology company, provides hardware and software solutions for the technology and resource sectors in Australia, Malaysia, the United States, and the United Kingdom. The AU$118m market-cap company posted a loss in its most recent financial year of US$9.3m and a latest trailing-twelve-month loss of US$802k shrinking the gap between loss and breakeven. The most pressing concern for investors is DUG Technology's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for DUG Technology

Consensus from 2 of the Australian Software analysts is that DUG Technology is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$4.9m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 67% is expected, which signals high confidence from analysts. 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 DUG Technology's upcoming projects, however, bear in mind 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 27% 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 key fundamentals of DUG Technology 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 DUG Technology, take a look at DUG Technology's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

1. Valuation: What is DUG Technology 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 DUG Technology 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 DUG Technology’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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