Analysts Expect Breakeven For Saturn Metals Limited (ASX:STN) Before Long

We feel now is a pretty good time to analyse Saturn Metals Limited's (ASX:STN) business as it appears the company may be on the cusp of a considerable accomplishment. Saturn Metals Limited engages in the exploration for precious metals in Australia. The AU$47m market-cap company posted a loss in its most recent financial year of AU$1.5m and a latest trailing-twelve-month loss of AU$1.2m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Saturn Metals will turn a profit, with the big question being “when will the company 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 Saturn Metals

According to some industry analysts covering Saturn Metals, breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of AU$129m in 2024. The company is therefore projected to breakeven around 3 years from now. 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 66% is expected, 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 Saturn Metals' growth isn’t the focus of this broad overview, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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

This article is not intended to be a comprehensive analysis on Saturn Metals, so if you are interested in understanding the company at a deeper level, take a look at Saturn Metals' company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is Saturn Metals 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 Saturn Metals 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 Saturn Metals’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. 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.
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