Ascot Resources Ltd.'s (TSE:AOT) Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Ascot Resources Ltd.'s (TSE:AOT) future prospects. Ascot Resources Ltd. operates as a mineral development and exploration company in the United States and Canada. With the latest financial year loss of CA$11m and a trailing-twelve-month loss of CA$18m, the CA$236m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Ascot Resources' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Ascot Resources

Ascot Resources is bordering on breakeven, according to the 4 Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of CA$24m in 2024. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 125% year-on-year, on average, which signals high confidence from analysts. 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 Ascot Resources given that this is a high-level summary, though, bear in mind that typically 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 4.3% 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:

There are key fundamentals of Ascot Resources 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 Ascot Resources, take a look at Ascot Resources' company page on Simply Wall St. We've also put together a list of important factors you should further examine:

1. Valuation: What is Ascot Resources 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 Ascot Resources 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 Ascot Resources’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.