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When Will Horizonte Minerals Plc (LON:HZM) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Horizonte Minerals Plc's (LON:HZM) future prospects. Horizonte Minerals Plc, together with its subsidiaries, engages in the exploration and development of mineral projects in Brazil. With the latest financial year loss of US$5.3m and a trailing-twelve-month loss of US$7.2m, the UK£48m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Horizonte Minerals will turn a profit, with the big question being “when will the company breakeven?” 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 Horizonte Minerals

According to the 5 industry analysts covering Horizonte Minerals, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$56m in 2025. Therefore, the company is expected to breakeven roughly 2 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 68%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

Given this is a high-level overview, we won’t go into details of Horizonte Minerals' upcoming projects, however, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

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Before we wrap up, there’s one issue worth mentioning. Horizonte Minerals currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Horizonte Minerals' case is 93%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Horizonte Minerals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Horizonte Minerals' company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

  1. Historical Track Record: What has Horizonte Minerals' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Horizonte Minerals' 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.