We feel now is a pretty good time to analyse Lithium Americas Corp.'s (TSE:LAC) business as it appears the company may be on the cusp of a considerable accomplishment. Lithium Americas Corp. operates as a resource company in the United States and Argentina. The CA$3.8b market-cap company posted a loss in its most recent financial year of US$94m and a latest trailing-twelve-month loss of US$11m shrinking the gap between loss and breakeven. The most pressing concern for investors is Lithium Americas' 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.
Lithium Americas is bordering on breakeven, according to the 3 Canadian Metals and Mining analysts. They expect the company to post a final loss in 2022, before turning a profit of US$31m in 2023. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 45% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Lithium Americas' growth isn’t the focus of this broad overview, though, keep in mind that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 16% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of Lithium Americas 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 Lithium Americas, take a look at Lithium Americas' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:
Historical Track Record: What has Lithium Americas' 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 Lithium Americas' 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.