With the business potentially at an important milestone, we thought we'd take a closer look at Piedmont Lithium Inc.'s (ASX:PLL) future prospects. Piedmont Lithium Inc. engages in the exploration and development of resource projects in the United States. The AU$1.3b market-cap company posted a loss in its most recent financial year of US$5.7m and a latest trailing-twelve-month loss of US$7.7m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Piedmont Lithium's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 7 of the Australian Metals and Mining analysts is that Piedmont Lithium is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$93m in 2024. The company is therefore projected to breakeven around 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% 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.
We're not going to go through company-specific developments for Piedmont Lithium given that this is a high-level summary, however, keep in mind that typically 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 3.4% 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.
There are key fundamentals of Piedmont 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 Piedmont Lithium, take a look at Piedmont Lithium's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
Historical Track Record: What has Piedmont Lithium'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Piedmont Lithium'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.
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.
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