When Will Piedmont Lithium Inc. (ASX:PLL) Turn A Profit?

By
Simply Wall St
Published
February 24, 2022
ASX:PLL
Source: Shutterstock

Piedmont Lithium Inc. (ASX:PLL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Piedmont Lithium Inc., an exploration stage company, engages in the exploration and development of resource projects in the United States. With the latest financial year loss of US$20m and a trailing-twelve-month loss of US$29m, the AU$955m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Piedmont Lithium's 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 Piedmont Lithium

Piedmont Lithium is bordering on breakeven, according to the 6 Australian Metals and Mining analysts. They expect the company to post a final loss in 2023, before turning a profit of US$155m in 2024. So, the company is predicted to breakeven approximately 2 years 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 113%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:PLL Earnings Per Share Growth February 24th 2022

Given this is a high-level overview, we won’t go into details of Piedmont Lithium's upcoming projects, however, take into account that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 1.4% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Piedmont Lithium which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Piedmont Lithium, take a look at Piedmont Lithium's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

  1. Historical Track Record: What has Piedmont 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 Piedmont 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.

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