Stock Analysis

Galan Lithium Limited (ASX:GLN): Are Analysts Optimistic?

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Galan Lithium Limited (ASX:GLN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Galan Lithium Limited acquires, explores for, evaluates, and develops mineral projects. On 30 June 2021, the AU$582m market-cap company posted a loss of AU$908k for its most recent financial year. As path to profitability is the topic on Galan Lithium's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Galan Lithium

According to some industry analysts covering Galan Lithium, breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of AU$800k in 2023. So, the company is predicted 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 109% is expected, 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.

ASX:GLN Earnings Per Share Growth January 14th 2022

Given this is a high-level overview, we won’t go into details of Galan Lithium's upcoming projects, though, keep in mind that generally 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.

Before we wrap up, there’s one aspect worth mentioning. Galan Lithium currently 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 the company 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.

Next Steps:

There are too many aspects of Galan Lithium to cover in one brief article, but the key fundamentals for the company can all be found in one place – Galan Lithium's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

  1. Historical Track Record: What has Galan Lithium'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 Galan Lithium'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.

Valuation is complex, but we're helping make it simple.

Find out whether Galan Lithium is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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