Horizonte Minerals Plc (LON:HZM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Horizonte Minerals Plc, together with its subsidiaries, engages in the exploration and development of mineral projects in Brazil. On 31 December 2022, the UK£376m market-cap company posted a loss of US$5.3m for its most recent financial year. As path to profitability is the topic on Horizonte Minerals' 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.
Horizonte Minerals is bordering on breakeven, according to the 2 British Metals and Mining analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$185m in 2025. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 52% year-on-year, on average, 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.
Given this is a high-level overview, we won’t go into details of Horizonte Minerals' upcoming projects, but, take into account 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 Horizonte Minerals is its 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 59%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of Horizonte Minerals 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 Horizonte Minerals, take a look at Horizonte Minerals' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
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.
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.
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.
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