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Aeon Metals Limited's (ASX:AML): Aeon Metals Limited engages in the exploration and development of mineral properties in Australia. With the latest financial year loss of -AU$13.9m and a trailing-twelve month of -AU$7.1m, the AU$141m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on AML’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for AML, its year of breakeven and its implied growth rate.
Expectation from Metals and Mining analysts is AML is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$8.1m in 2021. So, AML is predicted to breakeven approximately 2 years from now. What rate will AML have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 91%, which signals high confidence from analysts. If this rate turns out to be too aggressive, AML may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for AML 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.
One thing I’d like to point out is that AML has managed its capital judiciously, with debt making up 27% of equity. This means that AML 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 too many aspects of AML to cover in one brief article, but the key fundamentals for the company can all be found in one place – AML’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Historical Track Record: What has AML's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aeon Metals’s board and the CEO’s back ground.
- 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.