DZS Inc. (NASDAQ:DZSI): Is Breakeven Near?
We feel now is a pretty good time to analyse DZS Inc.'s (NASDAQ:DZSI) business as it appears the company may be on the cusp of a considerable accomplishment. DZS Inc. provides access and optical networking infrastructure and cloud software solutions in the Americas, Europe, the Middle East, Africa, and Asia. The US$251m market-cap company announced a latest loss of US$37m on 31 December 2022 for its most recent financial year result. As path to profitability is the topic on DZS' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for DZS
Consensus from 6 of the American Communications analysts is that DZS is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$5.2m in 2024. The company is therefore projected to breakeven just over a year 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 101%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of DZS' upcoming projects, but, take into account that generally 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 24% 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.
This article is not intended to be a comprehensive analysis on DZS, so if you are interested in understanding the company at a deeper level, take a look at DZS' company page on Simply Wall St. We've also put together a list of important aspects you should look at:
Valuation: What is DZS 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 DZS 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 DZS’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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