Yahoo Finance Sigma Lithium Corporation (NASDAQ:SGML) Has Found A Path To Profitability
Sigma Lithium Corporation (NASDAQ:SGML) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sigma Lithium Corporation engages in the exploration and development of lithium deposits in Brazil. The company’s loss has recently broadened since it announced a CA$127m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$145m, moving it further away from breakeven. As path to profitability is the topic on Sigma Lithium's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Sigma Lithium
According to the 7 industry analysts covering Sigma Lithium, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$236m in 2023. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 136% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Sigma Lithium's upcoming projects, but, take into account that generally 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 Sigma Lithium is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Sigma Lithium's case is 76%. 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 too many aspects of Sigma Lithium to cover in one brief article, but the key fundamentals for the company can all be found in one place – Sigma Lithium's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:
Valuation: What is Sigma Lithium 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 Sigma Lithium is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sigma 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.
