Almonty Industries Inc. (TSE:AII): Are Analysts Optimistic?

Almonty Industries Inc. (TSE:AII) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Almonty Industries Inc. engages in the mining, processing, and shipping of tungsten concentrate. The CA$112m market-cap company posted a loss in its most recent financial year of CA$12m and a latest trailing-twelve-month loss of CA$20m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Almonty Industries' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Almonty Industries

According to some industry analysts covering Almonty Industries, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of CA$26m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 82%, which is rather optimistic! 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 Almonty Industries' upcoming projects, though, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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 issue worth mentioning. Almonty Industries currently has a debt-to-equity ratio of 189%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Almonty Industries which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Almonty Industries, take a look at Almonty Industries' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Almonty Industries 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 Almonty Industries 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 Almonty Industries’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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