Breakeven On The Horizon For Kalium Lakes Limited (ASX:KLL)

Kalium Lakes Limited (ASX:KLL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kalium Lakes Limited operates as an exploration and development company in Western Australia. On 30 June 2021, the AU$172m market-cap company posted a loss of AU$623k for its most recent financial year. The most pressing concern for investors is Kalium Lakes' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Kalium Lakes

Consensus from 2 of the Australian Chemicals analysts is that Kalium Lakes is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$7.8m in 2023. Therefore, the company is expected to breakeven roughly 2 years 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 64% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

We're not going to go through company-specific developments for Kalium Lakes given that this is a high-level summary, however, bear in mind that typically 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 issue worth mentioning. Kalium Lakes currently has a debt-to-equity ratio of 118%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Kalium Lakes, so if you are interested in understanding the company at a deeper level, take a look at Kalium Lakes' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Valuation: What is Kalium Lakes 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 Kalium Lakes is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kalium Lakes’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.

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