Yahoo Finance Savannah Resources Plc (LON:SAV): Are Analysts Optimistic?
With the business potentially at an important milestone, we thought we'd take a closer look at Savannah Resources Plc's (LON:SAV) future prospects. Savannah Resources Plc engages in the exploration and development of lithium properties in Portugal. On 31 December 2023, the UK£61m market-cap company posted a loss of UK£3.5m for its most recent financial year. Many investors are wondering about the rate at which Savannah Resources will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Savannah Resources
Savannah Resources is bordering on breakeven, according to some British Metals and Mining analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of UK£45m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Savannah Resources 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. Savannah Resources currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high 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:
This article is not intended to be a comprehensive analysis on Savannah Resources, so if you are interested in understanding the company at a deeper level, take a look at Savannah Resources' company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Valuation: What is Savannah Resources worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Savannah Resources is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Savannah Resources’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.
