Breakeven On The Horizon For Adriatic Metals PLC (ASX:ADT)

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 AU$549m market-cap company announced a latest loss of UK£10m on 31 December 2021 for its most recent financial year result. Many investors are wondering about the rate at which Adriatic Metals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Adriatic Metals

According to the 3 industry analysts covering Adriatic Metals, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of UK£63m in 2023. Therefore, the company is expected 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 64% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Adriatic Metals' growth isn’t the focus of this broad overview, though, keep in mind 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 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 The company has managed its capital judiciously, with debt making up 10% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around 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 essential factors you should look at:

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.