Group 6 Metals Limited's (ASX:G6M) Path To Profitability

We feel now is a pretty good time to analyse Group 6 Metals Limited's (ASX:G6M) business as it appears the company may be on the cusp of a considerable accomplishment. Group 6 Metals Limited operates in the mining industry. The AU$54m market-cap company’s loss lessened since it announced a AU$22m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$17m, as it approaches breakeven. The most pressing concern for investors is Group 6 Metals' 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.

See our latest analysis for Group 6 Metals

According to some industry analysts covering Group 6 Metals, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$32m in 2025. So, the company is predicted to breakeven just over a year 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 86% is expected, which is extremely buoyant. 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 Group 6 Metals given that this is a high-level summary, though, take into account that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Group 6 Metals is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Group 6 Metals' case is 80%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Group 6 Metals 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 Group 6 Metals, take a look at Group 6 Metals' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Group 6 Metals 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 Group 6 Metals 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 Group 6 Metals’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.

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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.