Loss-Making Talga Group Ltd (ASX:TLG) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse Talga Group Ltd's (ASX:TLG) business as it appears the company may be on the cusp of a considerable accomplishment. Talga Group Ltd, a battery anode and advanced materials company, engages in the exploration, development, and commercialization of battery anode products, conductive additives, and graphitic materials in Australia, Sweden, Germany, and the United Kingdom. The AU$163m market-cap company posted a loss in its most recent financial year of AU$43m and a latest trailing-twelve-month loss of AU$40m shrinking the gap between loss and breakeven. The most pressing concern for investors is Talga Group's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Talga Group

According to the 3 industry analysts covering Talga Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$30m in 2026. So, the company is predicted to breakeven approximately 2 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 73% 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.

Given this is a high-level overview, we won’t go into details of Talga Group's upcoming projects, though, take into account 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.

One thing we’d like to point out is that Talga Group has no debt on its balance sheet, which is rare for a loss-making 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 Talga Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Talga Group's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

1. Historical Track Record: What has Talga Group'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 Talga Group'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.

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