We feel now is a pretty good time to analyse Adriatic Metals PLC's (ASX:ADT) business as it appears the company may be on the cusp of a considerable accomplishment. Adriatic Metals PLC, through its subsidiaries, engages in the exploration and development of precious and base metals. The company’s loss has recently broadened since it announced a US$29m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$43m, moving it further away from breakeven. The most pressing concern for investors is Adriatic Metals' 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.

See our latest analysis for Adriatic Metals

Adriatic Metals is bordering on breakeven, according to the 7 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$4.3m in 2024. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 49%, which is rather optimistic! 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 Adriatic Metals given that this is a high-level summary, however, keep in mind 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 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 issue worth mentioning. Adriatic Metals currently has a debt-to-equity ratio of 107%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Adriatic Metals 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 Adriatic Metals, take a look at Adriatic Metals' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is Adriatic 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 Adriatic 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 Adriatic 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.

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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.