Yahoo Finance When Will Delta Lithium Limited (ASX:DLI) Become Profitable?
With the business potentially at an important milestone, we thought we'd take a closer look at Delta Lithium Limited's (ASX:DLI) future prospects. Delta Lithium Limited explores for and develops lithium properties in Western Australia. The AU$189m market-cap company posted a loss in its most recent financial year of AU$8.5m and a latest trailing-twelve-month loss of AU$7.4m shrinking the gap between loss and breakeven. The most pressing concern for investors is Delta 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.
Check out our latest analysis for Delta Lithium
According to the 3 industry analysts covering Delta Lithium, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$32m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 17%, which seems relatively fair. 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 Delta Lithium given that this is a high-level summary, but, bear 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 a double-digit 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. Delta Lithium 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 Delta Lithium, so if you are interested in understanding the company at a deeper level, take a look at Delta Lithium's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:
Valuation: What is Delta Lithium 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 Delta Lithium 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 Delta 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
