Australian Potash Limited's (ASX:APC) Path To Profitability
We feel now is a pretty good time to analyse Australian Potash Limited's (ASX:APC) business as it appears the company may be on the cusp of a considerable accomplishment. Australian Potash Limited engages in the exploration of mineral properties in Australia. The AU$30m market-cap company announced a latest loss of AU$5.6m on 30 June 2022 for its most recent financial year result. Many investors are wondering about the rate at which Australian Potash 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.
Check out our latest analysis for Australian Potash
Expectations from some of the Australian Metals and Mining analysts is that Australian Potash is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$4.1m in 2025. Therefore, the company is expected to breakeven roughly 3 years from now. 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 74% is expected, 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.
Underlying developments driving Australian Potash's growth isn’t the focus of this broad overview, 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that Australian Potash 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 too many aspects of Australian Potash to cover in one brief article, but the key fundamentals for the company can all be found in one place – Australian Potash's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:
Valuation: What is Australian Potash 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 Australian Potash 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 Australian Potash’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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