In This Article:
With the business potentially at an important milestone, we thought we'd take a closer look at Desert Mountain Energy Corp.'s (CVE:DME) future prospects. Desert Mountain Energy Corp. engages in the exploration and development of oil and gas, helium, hydrogen, condensate, and mineral properties in the Southwestern United States. The CA$24m market-cap company’s loss lessened since it announced a CA$12m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$9.7m, as it approaches breakeven. The most pressing concern for investors is Desert Mountain Energy's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Desert Mountain Energy
Desert Mountain Energy is bordering on breakeven, according to some Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$200k in 2025. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 120% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Desert Mountain Energy's growth isn’t the focus of this broad overview, however, bear in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, 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. Desert Mountain Energy currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Desert Mountain Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Desert Mountain Energy's company page on Simply Wall St. We've also put together a list of relevant factors you should look at: