Piedmont Lithium Inc. (ASX:PLL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Piedmont Lithium Inc., an exploration stage company, engages in the exploration and development of resource projects in the United States. The AU$1.2b market-cap company posted a loss in its most recent financial year of US$43m and a latest trailing-twelve-month loss of US$47m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Piedmont 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.
Piedmont Lithium is bordering on breakeven, according to the 5 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$9.7m in 2023. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 77% year-on-year, on average, which is rather optimistic! 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, though, bear 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 0.3% 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 important aspects you should look at:
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.
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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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