With the business potentially at an important milestone, we thought we'd take a closer look at Cadiz Inc.'s (NASDAQ:CDZI) future prospects. Cadiz Inc., together with its subsidiaries, provides water solutions in the United States. The US$368m market-cap company’s loss lessened since it announced a US$39m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$38m, as it approaches breakeven. As path to profitability is the topic on Cadiz's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Cadiz is bordering on breakeven, according to the 3 American Water Utilities analysts. They expect the company to post a final loss in 2027, before turning a profit of US$45m in 2028. So, the company is predicted to breakeven approximately 2 years from today. 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 58%, 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 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 issue worth mentioning. Cadiz currently has a debt-to-equity ratio of over 2x. 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 around investing in the loss-making company.

Next Steps:

There are key fundamentals of Cadiz 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 Cadiz, take a look at Cadiz's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Historical Track Record: What has Cadiz'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.
2. 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.
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.

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.