We feel now is a pretty good time to analyse Sigma Lithium Corporation's (NASDAQ:SGML) business as it appears the company may be on the cusp of a considerable accomplishment. Sigma Lithium Corporation engages in the exploration and development of lithium deposits in Brazil. With the latest financial year loss of CA$38m and a trailing-twelve-month loss of CA$71m, the US$1.4b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Sigma Lithium's investors mind, we've decided to gauge market sentiment. 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 Sigma Lithium

Sigma Lithium is bordering on breakeven, according to the 4 American Metals and Mining analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$105m in 2025. Therefore, the company is expected to breakeven just over a year 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 216%, 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 Sigma Lithium given that this is a high-level summary, but, keep in mind that by and large 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.

One thing we would like to bring into light with Sigma Lithium is its debt-to-equity ratio of 166%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in 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 compiled a list of important factors you should look at:

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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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.