Yahoo Finance Analysts Expect Breakeven For Strandline Resources Limited (ASX:STA) Before Long
With the business potentially at an important milestone, we thought we'd take a closer look at Strandline Resources Limited's (ASX:STA) future prospects. Strandline Resources Limited, together with its subsidiaries, engages in the exploration and evaluation of mineral sands, and other base metal resources in Australia and Tanzania. With the latest financial year loss of AU$13m and a trailing-twelve-month loss of AU$8.7m, the AU$471m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Strandline Resources will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Strandline Resources
Consensus from 2 of the Australian Metals and Mining analysts is that Strandline Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$30m in 2023. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 79% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Strandline Resources' upcoming projects, however, take into account 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. Strandline Resources currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Strandline Resources' case is 89%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Strandline Resources, so if you are interested in understanding the company at a deeper level, take a look at Strandline Resources' company page on Simply Wall St. We've also compiled a list of key factors you should look at:
Valuation: What is Strandline Resources 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 Strandline Resources is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Strandline Resources’s board and the CEO’s background.
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.
