Lake Resources NL (ASX:LKE): When will it be profitable?


Lake NL Resources (ASX: LKE) may be approaching a major achievement in his company, so we’d like to shed some light on the company. Lake Resources NL explores and develops lithium brine projects in Argentina. With the last loss of A$2.9 million in the financial year and a loss of A$6.1 million in the last twelve months, the A$1.0 billion market capitalization company has amplified its loss by moving further away from its objective of equilibrium. Many investors are wondering about the rate at which Lake Resources will make a profit, with the big question being “when will the company break even?” Below, we’ll provide a high-level summary of industry analysts’ expectations for the company.

See our latest analysis for Lake Resources

According to the 2 industry analysts covering Lake Resources, the consensus is that the break-even point is near. They forecast the business to incur a terminal loss in 2023, before generating positive profits of A$1.6 million in 2024. Thus, the business is expected to break even in about 2 years. How fast will the business need to grow each year to break even by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 99% year-over-year, on average, which is extremely dynamic. If the business grows at a slower rate, it will become profitable later than expected.

earnings per share growth

Since this is a high-level overview, we won’t go into details of Lake Resources’ upcoming projects, but take into account that a metals and mining company typically has cash flow irregular that depend on the natural resource extracted and the stage at which the company operates. This means that the significant growth rates ahead are not abnormal as the company begins to reap the benefits of past investments.

One thing we would like to point out is that Lake Resources has zero debt on its balance sheet, which is quite unusual for a cash-intensive metals and mining company, which typically has a high level of debt per relative to its equity. This means that the company has operated solely on its equity investment and has no debt. This aspect reduces the risk associated with investing in the loss-making company.

Next steps:

There are fundamentals of Lake Resources that are not covered in this article, but we must re-emphasize that this is only a basic overview. For a more complete overview of the resources of the lake, take a look at Lake Resources company page on Simply Wall St. We’ve also compiled a list of essential factors you should consider:

  1. Evaluation: What is Lake Resources worth today? Has future growth potential already been factored into the price? The intrinsic value infographic in our free research report allows you to visualize if Lake Resources is currently mispriced by the market.

  2. Management team: An experienced management team at the helm boosts our confidence in the business – take a look at who sits on the Lake Resources board and the CEO’s background.

  3. Other High Performing Stocks: Are there other stocks that offer better prospects with a proven track record? Discover our free list of these great stocks here.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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