Red Dirt Metals Limited (ASX:RDT) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse Red Dirt Metals Limited's (ASX:RDT) business as it appears the company may be on the cusp of a considerable accomplishment. Red Dirt Metals Limited, together with its subsidiaries, explores for, evaluates, and develops gold and other metals primarily in Western Australia. With the latest financial year loss of AU$8.1m and a trailing-twelve-month loss of AU$9.3m, the AU$147m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Red Dirt Metals' 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.

View our latest analysis for Red Dirt Metals

According to the 2 industry analysts covering Red Dirt Metals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$1.1m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Red Dirt Metals' growth isn’t the focus of this broad overview, though, keep 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Red Dirt Metals currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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:

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

1. Historical Track Record: What has Red Dirt Metals' 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 Red Dirt Metals' 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.