Battery Minerals Limited’s (ASX:BAT): Battery Minerals Limited engages in the exploration of mineral properties in East Africa. The company’s loss has recently broadened since it announced a -AU$6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -AU$7m, moving it further away from breakeven. As path to profitability is the topic on BAT’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for BAT, its year of breakeven and its implied growth rate.
According to the industry analysts covering BAT, breakeven is near. They anticipate the company to incur a final loss in 2018, before generating positive profits of AU$3m in 2019. So, BAT is predicted to breakeven approximately a couple of months from now! How fast will BAT have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 78% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, BAT may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for BAT given that this is a high-level summary, but, bear in mind that typically 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 I’d like to point out is that BAT has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. This means that BAT has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on BAT, so if you are interested in understanding the company at a deeper level, take a look at BAT’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:
- Historical Track Record: What has BAT’s 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Battery Minerals’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.