Running discussion on SP, page-65201

We feel now is a pretty good time to analyse AVZ Minerals Limited's (ASX:AVZ) business as it appears the company may be on the cusp of a considerable accomplishment. AVZ Minerals Limited explores for mineral properties. The AU$2.8b market-cap company announced a latest loss of AU$5.4m on 30 June 2021 for its most recent financial year result. The most pressing concern for investors is AVZ Minerals' path to profitability – when will it 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 AVZ Minerals

AVZ Minerals is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2023, before turning a profit of AU$73m in 2024. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 85% 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.

Underlying developments driving AVZ Minerals' growth isn’t the focus of this broad overview, but, take into account 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 AVZ Minerals 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:

There are key fundamentals of AVZ Minerals 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 AVZ Minerals, take a look at AVZ Minerals' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is AVZ Minerals 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 AVZ Minerals is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on AVZ Minerals’s board and the CEO’s background.
3. 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.