Bass Metals Limited's (ASX:BSM): Bass Metals Limited produces industrial mineral concentrates. On 30 June 2019, the AU$14m market-cap posted a loss of -AU$6.9m for its most recent financial year. The most pressing concern for investors is BSM’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for BSM.
Consensus from the 2 Metals and Mining analysts is BSM is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$5.9m in 2021. Therefore, BSM is expected to breakeven roughly a few months from now. How fast will BSM have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 84% 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 BSM’s growth isn’t the focus of this broad overview, but, keep 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 I wrap up, there’s one aspect worth mentioning. BSM has managed its capital prudently, with debt making up 12% of equity. This means that BSM 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 BSM which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at BSM, take a look at BSM’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:
- Historical Track Record: What has BSM's 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 Bass Metals’s board and the CEO’s back ground.
- 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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