When Will Rock Tech Lithium Inc. (CVE:RCK) Become Profitable?

Rock Tech Lithium Inc. (CVE:RCK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rock Tech Lithium Inc. engages in the exploration and development of lithium properties. The CA$203m market-cap company posted a loss in its most recent financial year of CA$22m and a latest trailing-twelve-month loss of CA$54m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Rock Tech Lithium 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 Rock Tech Lithium

According to the 2 industry analysts covering Rock Tech Lithium, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of CA$29m in 2025. So, the company is predicted to breakeven approximately 2 years 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 32%, which signals high confidence from analysts. 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 Rock Tech Lithium given that this is a high-level summary, 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. Rock Tech Lithium 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Valuation: What is Rock Tech 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 Rock Tech 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 Rock Tech 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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