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With the business potentially at an important milestone, we thought we'd take a closer look at Cadoux Limited's (ASX:CCM) future prospects. Cadoux Limited engages in the exploration, evaluation, and development of mineral properties in Australia and the Southeast Asia. The AU$23m market-cap company posted a loss in its most recent financial year of AU$4.2m and a latest trailing-twelve-month loss of AU$2.6m shrinking the gap between loss and breakeven. The most pressing concern for investors is Cadoux's 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 Cadoux
According to some industry analysts covering Cadoux, breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$16m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. 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 90%, which is extremely buoyant. 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 Cadoux's upcoming projects, but, bear 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. 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. Cadoux currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. This means that the company 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 Cadoux 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 Cadoux, take a look at Cadoux's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
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Historical Track Record: What has Cadoux'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 Cadoux's 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.