Ascot Resources Ltd.'s (TSE:AOT) Profit Outlook

Ascot Resources Ltd. (TSE:AOT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ascot Resources Ltd. engages in the exploration, evaluation, and development of mineral properties in the United States and Canada. With the latest financial year loss of CA$10m and a trailing-twelve-month loss of CA$9.0m, the CA$287m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Ascot Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Ascot Resources

Ascot Resources is bordering on breakeven, according to the 3 Canadian Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of CA$149m in 2025. Therefore, the company is expected to breakeven just over a year from today. 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 45% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Ascot Resources' upcoming projects, however, bear in mind 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. The company has managed its capital judiciously, with debt making up 13% 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:

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

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