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Core Lithium Ltd (ASX:CXO): Are Analysts Optimistic?

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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 exploration and development of lithium and various metal deposits in Northern Territory and South Australia. The AU$940m market-cap company announced a latest loss of AU$2.9m on 30 June 2021 for its most recent financial year result. As path to profitability is the topic on Core Lithium'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.

View our latest analysis for Core Lithium

According to some industry analysts covering Core Lithium, breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of AU$38m in 2023. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% 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.

earnings-per-share-growth
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Given this is a high-level overview, we won’t go into details of Core Lithium's upcoming projects, however, take into account that generally 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 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of Core Lithium to cover in one brief article, but the key fundamentals for the company can all be found in one place – Core Lithium's company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:

  1. Historical Track Record: What has Core Lithium's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. 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.

  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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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