Lotus Resources Limited's (ASX:LOT) Shift From Loss To Profit
We feel now is a pretty good time to analyse Lotus Resources Limited's (ASX:LOT) business as it appears the company may be on the cusp of a considerable accomplishment. Lotus Resources Limited explores for, develops, and evaluates mineral properties in Australia and Africa. The AU$319m market-cap company announced a latest loss of AU$12m on 30 June 2022 for its most recent financial year result. The most pressing concern for investors is Lotus Resources' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Lotus Resources
According to the 2 industry analysts covering Lotus Resources, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$71m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% 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 Lotus Resources' upcoming projects, however, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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. Lotus Resources currently has no debt on its balance sheet, which is rare for a loss-making 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.
This article is not intended to be a comprehensive analysis on Lotus Resources, so if you are interested in understanding the company at a deeper level, take a look at Lotus Resources' company page on Simply Wall St. We've also put together a list of essential factors you should further research:
Valuation: What is Lotus 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 Lotus Resources 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 Lotus Resources’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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