Yahoo Finance When Will Sigma Lithium Corporation (NASDAQ:SGML) Become Profitable?
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. On 31 December 2021, the US$1.8b market-cap company posted a loss of CA$34m for its most recent financial year. As path to profitability is the topic on Sigma Lithium's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Sigma Lithium
Consensus from 2 of the American Metals and Mining analysts is that Sigma Lithium is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of CA$325m in 2023. So, the company is predicted 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 143% is expected, which is extremely buoyant. 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, however, take into account that generally 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.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.1% 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.
Next Steps:
This article is not intended to be a comprehensive analysis on Sigma Lithium, so if you are interested in understanding the company at a deeper level, take a look at Sigma Lithium's company page on Simply Wall St. We've also put together a list of important factors you should further research:
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.
