Bushveld Minerals Limited (LON:BMN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Bushveld Minerals Limited operates as an integrated primary vanadium producer for the steel, energy, chemicals and aerospace industries in South Africa, Europe, Asia, the United States, and internationally. The UK£35m market-cap company posted a loss in its most recent financial year of US$39m and a latest trailing-twelve-month loss of US$50m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Bushveld Minerals will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 3 industry analysts covering Bushveld Minerals, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$15m in 2025. So, the company is predicted to breakeven approximately 2 years from now. 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 68% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Bushveld Minerals' 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. 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 issue worth mentioning. Bushveld Minerals currently has a debt-to-equity ratio of 113%. Generally, the rule of thumb is 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.
This article is not intended to be a comprehensive analysis on Bushveld Minerals, so if you are interested in understanding the company at a deeper level, take a look at Bushveld Minerals' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
Valuation: What is Bushveld Minerals 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 Bushveld Minerals 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 Bushveld Minerals’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.