When Will St Barbara Limited (ASX:SBM) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at St Barbara Limited's (ASX:SBM) future prospects. St Barbara Limited, together with its subsidiaries, engages in the exploration, development, mining, and sale of gold. The company’s loss has recently broadened since it announced a AU$54m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$60m, moving it further away from breakeven. Many investors are wondering about the rate at which St Barbara 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.

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Consensus from 3 of the Australian Metals and Mining analysts is that St Barbara is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$48m in 2026. The company is therefore projected 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 76% is expected, which signals high confidence from analysts. 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 St Barbara given that this is a high-level summary, but, bear in mind that by and large 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.

View our latest analysis for St Barbara

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 1.2% 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:

This article is not intended to be a comprehensive analysis on St Barbara, so if you are interested in understanding the company at a deeper level, take a look at St Barbara's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

1. Historical Track Record: What has St Barbara'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 St Barbara'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.