When Will Poseidon Nickel Limited (ASX:POS) Breakeven?

We feel now is a pretty good time to analyse Poseidon Nickel Limited's (ASX:POS) business as it appears the company may be on the cusp of a considerable accomplishment. Poseidon Nickel Limited engages in the exploration, mining, and production of mineral properties in Australia. With the latest financial year loss of AU$11m and a trailing-twelve-month loss of AU$53m, the AU$22m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Poseidon Nickel will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Poseidon Nickel

Expectations from some of the Australian Metals and Mining analysts is that Poseidon Nickel is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$21m 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 170%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Poseidon Nickel given that this is a high-level summary, however, bear in mind that typically 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.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 0.8% 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 too many aspects of Poseidon Nickel to cover in one brief article, but the key fundamentals for the company can all be found in one place – Poseidon Nickel's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

1. Historical Track Record: What has Poseidon Nickel'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 Poseidon Nickel'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.