Century Aluminum Company (NASDAQ:CENX) Is Expected To Breakeven In The Near Future
With the business potentially at an important milestone, we thought we'd take a closer look at Century Aluminum Company's (NASDAQ:CENX) future prospects. Century Aluminum Company, together with its subsidiaries, produces standard-grade and value-added primary aluminum products in the United States and Iceland. The US$853m market-cap company posted a loss in its most recent financial year of US$14m and a latest trailing-twelve-month loss of US$68m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Century Aluminum 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.
Check out our latest analysis for Century Aluminum
Century Aluminum is bordering on breakeven, according to the 2 American Metals and Mining analysts. They expect the company to post a final loss in 2023, before turning a profit of US$85m 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 93% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Century Aluminum's growth isn’t the focus of this broad overview, though, bear in mind that by and large 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Century Aluminum is its debt-to-equity ratio of 143%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Century Aluminum, so if you are interested in understanding the company at a deeper level, take a look at Century Aluminum's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:
Valuation: What is Century Aluminum 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 Century Aluminum 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 Century Aluminum’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.
