Battery Minerals Limited’s (ASX:BAT): Battery Minerals Limited engages in the exploration of mineral properties in East Africa. The company’s loss has recently broadened since it announced a -AU$5.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of -AU$6.5m, moving it further away from breakeven. Many investors are wondering the rate at which BAT will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for BAT.
View our latest analysis for Battery Minerals
BAT is bordering on breakeven, according to the 2 Metals and Mining analysts. They expect the company to post a final loss in 2018, before turning a profit of AU$3.2m in 2019. BAT is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which BAT must grow year-on-year. It turns out an average annual growth rate of 78% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, BAT may become profitable much later than analysts predict.
Underlying developments driving BAT’s growth isn’t the focus of this broad overview, however, keep in mind that by and large 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that BAT has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. This means that BAT 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.
Next Steps:
There are key fundamentals of BAT 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 BAT, take a look at BAT’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further research:
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Historical Track Record: What has BAT’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.
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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 Battery Minerals’s board and the CEO’s back ground.
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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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.