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Lepidico Limited (ASX:LPD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lepidico Limited engages in the exploration, development, and production of lithium chemicals. The AU$80m market-cap company’s loss lessened since it announced a AU$10m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$4.2m, as it approaches breakeven. Many investors are wondering about the rate at which Lepidico 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 2 industry analysts covering Lepidico, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$25m in 2024. The company is therefore projected to breakeven around 3 years 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 54% year-on-year, on average, which is rather optimistic! 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 Lepidico's upcoming projects, however, take into account that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Lepidico has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which typically has high 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.
There are too many aspects of Lepidico to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lepidico's company page on Simply Wall St. We've also put together a list of key factors you should further research:
Valuation: What is Lepidico 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 Lepidico 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 Lepidico’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.
This article by Simply Wall St is general in nature. 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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