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We feel now is a pretty good time to analyse Sigma Lithium Corporation's (NASDAQ:SGML) business as it appears the company may be on the cusp of a considerable accomplishment. Sigma Lithium Corporation engages in the exploration and development of lithium deposits in Brazil. The US$895m market-cap company announced a latest loss of CA$70m on 31 December 2024 for its most recent financial year result. The most pressing concern for investors is Sigma Lithium's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 4 industry analysts covering Sigma Lithium, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$6.2m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 147% 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.
Given this is a high-level overview, we won’t go into details of Sigma Lithium's upcoming projects, but, take into account 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Check out our latest analysis for Sigma Lithium
One thing we would like to bring into light with Sigma Lithium is its debt-to-equity ratio of 188%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
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There are key fundamentals of Sigma Lithium 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 Sigma Lithium, take a look at Sigma Lithium's company page on Simply Wall St. We've also put together a list of essential aspects you should look at: