Analysts Expect Breakeven For Adriatic Metals PLC (ASX:ADT) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at Adriatic Metals PLC's (ASX:ADT) future prospects. Adriatic Metals PLC, through its subsidiaries, engages in the exploration and development of precious and base metals. The company’s loss has recently broadened since it announced a US$47m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$48m, moving it further away from breakeven. As path to profitability is the topic on Adriatic Metals' 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 Adriatic Metals

According to the 5 industry analysts covering Adriatic Metals, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$110m in 2024. The company is therefore projected to breakeven just over a year from now. 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 55% is expected, 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 Adriatic Metals' upcoming projects, however, take into account that by and large 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Adriatic Metals currently has a debt-to-equity ratio of 140%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Adriatic Metals, so if you are interested in understanding the company at a deeper level, take a look at Adriatic Metals' company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is Adriatic 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 Adriatic 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 Adriatic 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.