When Can We Expect A Profit From Andromeda Metals Limited (ASX:ADN)?
We feel now is a pretty good time to analyse Andromeda Metals Limited's (ASX:ADN) business as it appears the company may be on the cusp of a considerable accomplishment. Andromeda Metals Limited, together with its subsidiaries, operates as a mineral exploration company in Australia. The AU$90m market-cap company announced a latest loss of AU$9.5m on 30 June 2023 for its most recent financial year result. As path to profitability is the topic on Andromeda Metals' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Andromeda Metals
Expectations from some of the Australian Metals and Mining analysts is that Andromeda Metals is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$18m in 2025. Therefore, the company is expected to breakeven just over a year from today. 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 92% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Andromeda Metals' upcoming projects, however, take into account 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. 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 aspect worth mentioning. Andromeda Metals currently 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. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Andromeda Metals 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 Andromeda Metals, take a look at Andromeda Metals' company page on Simply Wall St. We've also put together a list of important aspects you should further research:
Historical Track Record: What has Andromeda Metals' 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 Andromeda Metals' 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.
