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Galan Lithium Limited (ASX:GLN): Are Analysts Optimistic?

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Galan Lithium Limited (ASX:GLN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Galan Lithium Limited acquires, explores for, evaluates, and develops mineral projects. The AU$433m market-cap company announced a latest loss of AU$908k on 30 June 2021 for its most recent financial year result. The most pressing concern for investors is Galan Lithium's path to profitability – when will it breakeven? 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 Galan Lithium

According to some industry analysts covering Galan Lithium, breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$9.0m in 2024. The company is therefore projected to breakeven around 3 years from now. 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 50%, 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
earnings-per-share-growth

We're not going to go through company-specific developments for Galan Lithium given that this is a high-level summary, however, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Galan Lithium 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. 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:

This article is not intended to be a comprehensive analysis on Galan Lithium, so if you are interested in understanding the company at a deeper level, take a look at Galan Lithium's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

  1. Historical Track Record: What has Galan 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 Galan 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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