With the business potentially at an important milestone, we thought we'd take a closer look at Andromeda Metals Limited's (ASX:ADN) future prospects. Andromeda Metals Limited, together with its subsidiaries, operates as a mineral exploration company in Australia. The AU$656m market-cap company announced a latest loss of AU$3.4m on 30 June 2020 for its most recent financial year result. As path to profitability is the topic on Andromeda Metals' 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 Andromeda Metals

Expectations from some of the Australian Metals and Mining analysts is that Andromeda Metals is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$3.6m in 2022. So, the company is predicted to breakeven just over a year 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 57%, which is rather optimistic! 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 Andromeda Metals' upcoming projects, but, 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. Andromeda Metals 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:

There are too many aspects of Andromeda Metals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Andromeda Metals' company page on Simply Wall St. We've also compiled a list of important factors you should look at:

1. Valuation: What is Andromeda Metals 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 Andromeda Metals 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 Andromeda Metals’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.

This article by Simply Wall St is general in nature. 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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