Core Lithium Ltd’s (ASX:CXO) Shift From Loss To Profit

Core Lithium Ltd’s (ASX:CXO): Core Lithium Ltd. engages in the exploration for lithium and base metals deposits in Northern Territory and South Australia. The AU$39m market-cap company announced a latest loss of -AU$2.1m on 30 June 2018 for its most recent financial year result. Many investors are wondering the rate at which CXO will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CXO.

View our latest analysis for Core Lithium

Expectation from Metals and Mining analysts is CXO is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$29m in 2020. Therefore, CXO is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which CXO must grow year-on-year. It turns out an average annual growth rate of 50% 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.

ASX:CXO Past Future Earnings December 6th 18
ASX:CXO Past Future Earnings December 6th 18

Underlying developments driving CXO’s growth isn’t the focus of this broad overview, however, keep in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. CXO currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. CXO currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of CXO to cover in one brief article, but the key fundamentals for the company can all be found in one place – CXO’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:

  1. Historical Track Record: What has CXO’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.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Core Lithium’s board and the CEO’s back ground.
  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.

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 editorial-team@simplywallst.com.