We feel now is a pretty good time to analyse Poseidon Nickel Limited's (ASX:POS) business as it appears the company may be on the cusp of a considerable accomplishment. Poseidon Nickel Limited engages in the exploration, development, mining, and production of nickel and other mineral properties in Australia. The AU$285m market-cap company announced a latest loss of AU$11m on 30 June 2021 for its most recent financial year result. Many investors are wondering about the rate at which Poseidon Nickel 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 Poseidon Nickel

According to some industry analysts covering Poseidon Nickel, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$25m in 2023. So, the company is predicted to breakeven approximately 2 years 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 88% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict. earnings-per-share-growth

We're not going to go through company-specific developments for Poseidon Nickel 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Poseidon Nickel currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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 Poseidon Nickel, so if you are interested in understanding the company at a deeper level, take a look at Poseidon Nickel's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:

Historical Track Record: What has Poseidon Nickel'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 Poseidon Nickel'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.