Loss-Making Sigma Lithium Corporation (NASDAQ:SGML) Set To Breakeven

Sigma Lithium Corporation Ordinary Shares -0.45%

Sigma Lithium Corporation Ordinary Shares




Sigma Lithium Corporation (NASDAQ:SGML) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sigma Lithium Corporation engages in the exploration and development of lithium deposits in Brazil. The US$3.5b market-cap company posted a loss in its most recent financial year of CA$127m and a latest trailing-twelve-month loss of CA$106m shrinking the gap between loss and breakeven. As path to profitability is the topic on Sigma Lithium's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Sigma Lithium

Consensus from 4 of the American Metals and Mining analysts is that Sigma Lithium is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$50m in 2023. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 174% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

NasdaqCM:SGML Earnings Per Share Growth December 28th 2023

We're not going to go through company-specific developments for Sigma Lithium given that this is a high-level summary, but, keep in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. 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 issue worth mentioning. Sigma Lithium currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Sigma Lithium's case is 69%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Sigma Lithium to cover in one brief article, but the key fundamentals for the company can all be found in one place – Sigma Lithium's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

  1. Valuation: What is Sigma 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 Sigma Lithium 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 Sigma Lithium’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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