Bowen Coking Coal Limited (ASX:BCB): Are Analysts Optimistic?
Bowen Coking Coal Limited (ASX:BCB) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Bowen Coking Coal Limited, together with its subsidiaries, engages in the exploration and development of metallurgical coal in Australia. The company’s loss has recently broadened since it announced a AU$18m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$74m, moving it further away from breakeven. Many investors are wondering about the rate at which Bowen Coking Coal will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Bowen Coking Coal
Consensus from 2 of the Australian Metals and Mining analysts is that Bowen Coking Coal is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$182m in 2024. The company is therefore projected 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 43% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Bowen Coking Coal given that this is a high-level summary, though, 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 we would like to bring into light with Bowen Coking Coal is its debt-to-equity ratio of 180%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Bowen Coking Coal, so if you are interested in understanding the company at a deeper level, take a look at Bowen Coking Coal's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Bowen Coking Coal 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 Bowen Coking Coal 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 Bowen Coking Coal’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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