When Will Ascot Resources Ltd. (TSE:AOT) Turn A Profit?
With the business potentially at an important milestone, we thought we'd take a closer look at Ascot Resources Ltd.'s (TSE:AOT) future prospects. Ascot Resources Ltd. operates as a mineral development and exploration company in the United States and Canada. The company’s loss has recently broadened since it announced a CA$11m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$19m, moving it further away from breakeven. The most pressing concern for investors is Ascot Resources' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Ascot Resources
According to the 5 industry analysts covering Ascot Resources, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of CA$36m in 2024. The company is therefore projected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 109% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Ascot Resources' upcoming projects, however, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 4.9% 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:
There are key fundamentals of Ascot Resources 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 Ascot Resources, take a look at Ascot Resources' company page on Simply Wall St. We've also put together a list of important factors you should further examine:
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.
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.
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.
