With the business potentially at an important milestone, we thought we'd take a closer look at Kingston Resources Limited's (ASX:KSN) future prospects. Kingston Resources Limited engages in the exploration and evaluation of mineral properties in Australia. With the latest financial year loss of AU$2.1m and a trailing-twelve-month loss of AU$1.3m, the AU$41m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Kingston Resources' 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.
Check out our latest analysis for Kingston Resources
Expectations from some of the Australian Metals and Mining analysts is that Kingston Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$6.5m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 88%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Kingston Resources' growth isn’t the focus of this broad overview, though, take into account that generally 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. The company has managed its capital judiciously, with debt making up 7.7% 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.
Next Steps:
There are too many aspects of Kingston Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Kingston Resources' company page on Simply Wall St. We've also put together a list of important factors you should further examine:
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Historical Track Record: What has Kingston Resources' 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.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kingston Resources' board and the CEO’s background.
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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.