- Metals and Mining
Breakeven On The Horizon For Vital Metals Limited (ASX:VML)
With the business potentially at an important milestone, we thought we'd take a closer look at Vital Metals Limited's (ASX:VML) future prospects. Vital Metals Limited develops and explores for rare earths projects in Burkina Faso, Tanzania, Germany, and Canada. On 30 June 2022, the AU$106m market-cap company posted a loss of AU$4.8m for its most recent financial year. Many investors are wondering about the rate at which Vital 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 Vital Metals
Expectations from some of the Australian Metals and Mining analysts is that Vital Metals is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$20m in 2024. Therefore, the company is expected to breakeven just over a year 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 99% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Vital Metals given that this is a high-level summary, however, take into account 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 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. The company has managed its capital prudently, with debt making up 0.7% 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.
This article is not intended to be a comprehensive analysis on Vital Metals, so if you are interested in understanding the company at a deeper level, take a look at Vital Metals' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
- Valuation: What is Vital 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 Vital Metals is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Vital Metals’s board and the CEO’s background.
- 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.
Valuation is complex, but we're helping make it simple.
Find out whether Vital Metals is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Vital Metals Limited develops and explores for rare earths projects in Burkina Faso, Tanzania, Germany, and Canada.
High growth potential and good value.