Adriatic Metals PLC (ASX:ADT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Adriatic Metals PLC, through its subsidiaries, engages in the exploration and development of precious and base metals. On 31 December 2021, the AU$581m market-cap company posted a loss of UK£10m for its most recent financial year. The most pressing concern for investors is Adriatic Metals' 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.
Adriatic Metals is bordering on breakeven, according to the 4 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£80m in 2023. The company is therefore projected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 59% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Adriatic Metals' growth isn’t the focus of this broad overview, but, keep 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.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 10% 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.
There are key fundamentals of Adriatic Metals 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 Adriatic Metals, take a look at Adriatic Metals' company page on Simply Wall St. We've also put together a list of important factors you should look at:
Valuation: What is Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals’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.
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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.