With the business potentially at an important milestone, we thought we'd take a closer look at Sigma Lithium Corporation's (NASDAQ:SGML) future prospects. Sigma Lithium Corporation engages in the exploration and development of lithium deposits in Brazil. With the latest financial year loss of CA$34m and a trailing-twelve-month loss of CA$38m, the US$1.7b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Sigma Lithium will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Sigma Lithium is bordering on breakeven, according to the 3 American Metals and Mining analysts. They expect the company to post a final loss in 2022, before turning a profit of CA$358m in 2023. The company is therefore projected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 169% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Sigma Lithium's growth isn’t the focus of this broad overview, but, keep in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that Sigma Lithium has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
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 compiled a list of key factors you should look at:
- Historical Track Record: What has Sigma 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 Sigma 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.
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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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