Yahoo Finance Core Lithium Ltd's (ASX:CXO) Path To Profitability
Core Lithium Ltd (ASX:CXO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Core Lithium Ltd engages in the development of lithium and various metal deposits in Northern Territory and South Australia. The AU$2.1b market-cap company announced a latest loss of AU$7.5m on 30 June 2022 for its most recent financial year result. Many investors are wondering about the rate at which Core Lithium 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.
Check out our latest analysis for Core Lithium
According to the 6 industry analysts covering Core Lithium, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$273m in 2024. The company is therefore projected 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 35% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Core Lithium given that this is a high-level summary, though, keep in mind that generally a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Core Lithium 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 key fundamentals of Core Lithium 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 Core Lithium, take a look at Core Lithium's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Core Lithium 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 Core Lithium 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 Core Lithium’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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