Yahoo Finance Cadiz Inc.'s (NASDAQ:CDZI) Path To Profitability
We feel now is a pretty good time to analyse Cadiz Inc.'s (NASDAQ:CDZI) business as it appears the company may be on the cusp of a considerable accomplishment. Cadiz Inc., together with its subsidiaries, operates as a natural resources development company in the United States. The US$235m market-cap company’s loss lessened since it announced a US$34m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$29m, as it approaches breakeven. Many investors are wondering about the rate at which Cadiz 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 Cadiz
Cadiz is bordering on breakeven, according to some American Water Utilities analysts. They expect the company to post a final loss in 2024, before turning a profit of US$12m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 59%, 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 Cadiz's growth isn’t the focus of this broad overview, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Cadiz is its debt-to-equity ratio of 152%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 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 pertinent factors you should look at:
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.
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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