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Analysts Expect Strandline Resources Limited (ASX:STA) To Breakeven Soon

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. The AU$176m market-cap company announced a latest loss of AU$11m on 30 June 2023 for its most recent financial year result. As path to profitability is the topic on Strandline Resources' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Strandline Resources

Strandline Resources is bordering on breakeven, according to the 3 Australian Metals and Mining analysts. They expect the company to post a final loss in 2023, before turning a profit of AU$21m in 2024. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 35% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Strandline Resources' growth isn’t the focus of this broad overview, though, keep in mind that generally 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.

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Before we wrap up, there’s one issue worth mentioning. Strandline Resources currently has a debt-to-equity ratio of 118%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Strandline Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Strandline Resources' company page on Simply Wall St. We've also compiled a list of important factors you should further research:

  1. 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.

  2. 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.

  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.