Yahoo Finance When Can We Expect A Profit From Metals X Limited (ASX:MLX)?
We feel now is a pretty good time to analyse Metals X Limited's (ASX:MLX) business as it appears the company may be on the cusp of a considerable accomplishment. Metals X Limited engages in the production of tin in Australia. The AU$91m market-cap company announced a latest loss of AU$80m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Metals X's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Metals X
Consensus from 2 of the Australian Metals and Mining analysts is that Metals X is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$19m in 2023. So, the company is predicted to breakeven approximately 3 years from now. 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 105%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Metals X's upcoming projects, however, 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we would like to bring into light with Metals X is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Metals X's case is 58%. 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 key fundamentals of Metals X which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Metals X, take a look at Metals X's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:
Valuation: What is Metals X 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 Metals X 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 Metals X’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.
This article by Simply Wall St is general in nature. 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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