Rumble Resources Limited's (ASX:RTR) Path To Profitability

Rumble Resources Limited (ASX:RTR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rumble Resources Limited engages in the acquisition, exploration, and evaluation of base and precious metal projects in Australia. The AU$29m market-cap company posted a loss in its most recent financial year of AU$5.0m and a latest trailing-twelve-month loss of AU$5.1m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Rumble Resources will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Rumble Resources

Consensus from 2 of the Australian Metals and Mining analysts is that Rumble Resources is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of AU$9.0m in 2026. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 73% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Rumble Resources given that this is a high-level summary, however, bear 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. Rumble Resources 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 Rumble Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Rumble Resources' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Rumble 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 Rumble 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 Rumble 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.