When Can We Expect A Profit From Critical Elements Lithium Corporation (CVE:CRE)?

We feel now is a pretty good time to analyse Critical Elements Lithium Corporation's (CVE:CRE) business as it appears the company may be on the cusp of a considerable accomplishment. Critical Elements Lithium Corporation engages in the acquisition, exploration, and development of mining properties in Canada. The CA$172m market-cap company posted a loss in its most recent financial year of CA$6.4m and a latest trailing-twelve-month loss of CA$3.9m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Critical Elements Lithium will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Critical Elements Lithium

According to the 3 industry analysts covering Critical Elements Lithium, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of CA$4.3m in 2026. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 95% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Critical Elements Lithium given that this is a high-level summary, but, keep 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 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. Critical Elements Lithium currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Critical Elements Lithium 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 Critical Elements Lithium, take a look at Critical Elements Lithium's company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Critical Elements Lithium 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 Critical Elements Lithium 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 Critical Elements Lithium’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.