We Might See A Profit From Ascot Resources Ltd. (TSE:AOT) Soon

We feel now is a pretty good time to analyse Ascot Resources Ltd.'s (TSE:AOT) business as it appears the company may be on the cusp of a considerable accomplishment. Ascot Resources Ltd. engages in the exploration, evaluation, and development of mineral properties in the United States and Canada. The CA$104m market-cap company’s loss lessened since it announced a CA$32m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$22m, as it approaches breakeven. As path to profitability is the topic on Ascot Resources' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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According to the 2 industry analysts covering Ascot Resources, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of CA$1.7m in 2025. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 110% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Ascot Resources' growth isn’t the focus of this broad overview, but, keep in mind 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

See our latest analysis for Ascot Resources

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 15% 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 pertinent aspects you should further research:

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.