Yahoo Finance Analysts Expect Breakeven For Australian Potash Limited (ASX:APC) Before Long
With the business potentially at an important milestone, we thought we'd take a closer look at Australian Potash Limited's (ASX:APC) future prospects. Australian Potash Limited engages in the exploration of mineral properties in Australia. On 30 June 2022, the AU$19m market-cap company posted a loss of AU$5.6m for its most recent financial year. As path to profitability is the topic on Australian Potash's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Australian Potash
Australian Potash is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$4.1m in 2025. The company is therefore projected to breakeven around 2 years from now. 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 74% 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.
Given this is a high-level overview, we won’t go into details of Australian Potash's upcoming projects, though, take into account 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one aspect worth mentioning. Australian Potash currently has no debt on its balance sheet, which is rare for a loss-making 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:
This article is not intended to be a comprehensive analysis on Australian Potash, so if you are interested in understanding the company at a deeper level, take a look at Australian Potash's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
Valuation: What is Australian Potash 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 Australian Potash 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 Australian Potash’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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