When Will Lotus Resources Limited (ASX:LOT) Become Profitable?

Lotus Resources Limited (ASX:LOT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lotus Resources Limited engages in the exploration, evaluation, and development of uranium properties in Australia and Africa. On 30 June 2023, the AU$560m market-cap company posted a loss of AU$9.9m for its most recent financial year. The most pressing concern for investors is Lotus Resources' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Lotus Resources

According to the 2 industry analysts covering Lotus Resources, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$13m in 2025. So, the company is predicted to breakeven just over a year from today. 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 49% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Lotus Resources' upcoming projects, though, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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. Lotus Resources 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. 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:

This article is not intended to be a comprehensive analysis on Lotus Resources, so if you are interested in understanding the company at a deeper level, take a look at Lotus Resources' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

1. Valuation: What is Lotus Resources 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 Lotus Resources 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 Lotus Resources’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.