We feel now is a pretty good time to analyse Electra Battery Materials Corporation's (CVE:ELBM) business as it appears the company may be on the cusp of a considerable accomplishment. Electra Battery Materials Corporation acquires and explores for resource properties in the United States and Canada. The CA$156m market-cap company posted a loss in its most recent financial year of CA$35m and a latest trailing-twelve-month loss of CA$16m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Electra Battery Materials 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.
According to some industry analysts covering Electra Battery Materials, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$17m in 2023. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 163% year-on-year, on average, 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 Electra Battery Materials' upcoming projects, however, bear 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. 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 22% 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.
There are key fundamentals of Electra Battery Materials 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 Electra Battery Materials, take a look at Electra Battery Materials' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:
Valuation: What is Electra Battery Materials 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 Electra Battery Materials is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Electra Battery Materials’s board and the CEO’s background.
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.
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