Market Sentiment Around Loss-Making Latin Resources Limited (ASX:LRS)
With the business potentially at an important milestone, we thought we'd take a closer look at Latin Resources Limited's (ASX:LRS) future prospects. Latin Resources Limited engages in the exploration and evaluation of mining projects in Australia, Brazil, Peru, and Argentina. The company’s loss has recently broadened since it announced a AU$7.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$10m, moving it further away from breakeven. As path to profitability is the topic on Latin Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Latin Resources
Latin Resources is bordering on breakeven, according to the 3 Australian Metals and Mining analysts. They expect the company to post a final loss in 2025, before turning a profit of AU$110m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 72%, 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 Latin Resources' upcoming projects, however, keep in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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. Latin Resources currently 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. 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 too many aspects of Latin Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Latin Resources' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Latin Resources 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 Latin Resources 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 Latin Resources’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.
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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.
