When Can We Expect A Profit From Group 6 Metals Limited (ASX:G6M)?

With the business potentially at an important milestone, we thought we'd take a closer look at Group 6 Metals Limited's (ASX:G6M) future prospects. Group 6 Metals Limited operates in the mining industry. With the latest financial year loss of AU$22m and a trailing-twelve-month loss of AU$17m, the AU$25m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Group 6 Metals will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Group 6 Metals

Group 6 Metals is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of AU$32m in 2025. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 86%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Group 6 Metals' growth isn’t the focus of this broad overview, though, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Group 6 Metals is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Group 6 Metals' case is 80%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Group 6 Metals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Group 6 Metals' company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Valuation: What is Group 6 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 Group 6 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 Group 6 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.