Yahoo Finance Galan Lithium Limited's (ASX:GLN) Profit Outlook
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. With the latest financial year loss of AU$908k and a trailing-twelve-month loss of AU$2.1m, the AU$432m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Galan Lithium's 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 Galan Lithium
Expectations from some of the Australian Metals and Mining analysts is that Galan Lithium is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$800k in 2023. The company is therefore projected to breakeven just over a year 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 132%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Galan Lithium's upcoming projects, however, 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
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 compiled a list of key factors you should look at:
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.
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.
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.
