When Will Elementos Limited (ASX:ELT) Breakeven?
With the business potentially at an important milestone, we thought we'd take a closer look at Elementos Limited's (ASX:ELT) future prospects. Elementos Limited engages in the exploration and development of mineral properties in Australia and Spain. The AU$25m market-cap company announced a latest loss of AU$2.2m on 30 June 2023 for its most recent financial year result. The most pressing concern for investors is Elementos' 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.
View our latest analysis for Elementos
Elementos is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2025, before turning a profit of AU$17m in 2026. Therefore, the company is expected to breakeven roughly 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 51% 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 Elementos given that this is a high-level summary, but, bear in mind that generally 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one aspect worth mentioning. Elementos currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high 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 key fundamentals of Elementos 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 Elementos, take a look at Elementos' company page on Simply Wall St. We've also compiled a list of key aspects you should look at:
Historical Track Record: What has Elementos' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Elementos' 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.
