American West Metals Limited's (ASX:AW1) Profit Outlook

American West Metals Limited (ASX:AW1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. American West Metals Limited, together with its subsidiaries, engages in the acquisition, exploration, and development of mineral projects in the United States and Canada. With the latest financial year loss of AU$17m and a trailing-twelve-month loss of AU$25m, the AU$21m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which American West 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.

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American West Metals is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$25m in 2027. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 85% year-on-year, on average, which signals high confidence from analysts. 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 American West Metals' upcoming projects, but, 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.

View our latest analysis for American West Metals

One thing we would like to bring into light with American West Metals is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of American West Metals to cover in one brief article, but the key fundamentals for the company can all be found in one place – American West Metals' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Historical Track Record: What has American West Metals' 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.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on American West Metals' 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.