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With the business potentially at an important milestone, we thought we'd take a closer look at AVZ Minerals Limited's (ASX:AVZ) future prospects. AVZ Minerals Limited explores for mineral properties. On 30 June 2021, the AU$2.8b market-cap company posted a loss of AU$5.4m for its most recent financial year. As path to profitability is the topic on AVZ Minerals' 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.
AVZ Minerals is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$73m in 2024. Therefore, the company is expected to breakeven roughly 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 85%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving AVZ Minerals' growth isn’t the focus of this broad overview, but, take into account that typically 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.
Before we wrap up, there’s one aspect worth mentioning. AVZ Minerals currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high 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.
There are key fundamentals of AVZ Minerals 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 AVZ Minerals, take a look at AVZ Minerals' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
Valuation: What is AVZ Minerals 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 AVZ Minerals 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 AVZ Minerals’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.