Yahoo Finance Sheffield Resources Limited (ASX:SFX): Is Breakeven Near?
Sheffield Resources Limited’s (ASX:SFX): Sheffield Resources Limited explores for and develops mineral properties. The AU$264m market-cap company announced a latest loss of -AU$2m on 30 June 2018 for its most recent financial year result. Many investors are wondering the rate at which SFX will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for SFX, its year of breakeven and its implied growth rate.
Check out our latest analysis for Sheffield Resources
SFX is bordering on breakeven, according to Metals and Mining analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$39m in 2021. Therefore, SFX is expected to breakeven roughly a few months from now. What rate will SFX have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 70%, which is rather optimistic! If this rate turns out to be too aggressive, SFX may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for SFX given that this is a high-level summary, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that SFX has managed its capital judiciously, with debt making up 0.4% of equity. This means that SFX has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of SFX to cover in one brief article, but the key fundamentals for the company can all be found in one place – SFX’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:
Valuation: What is SFX 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 SFX 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 Sheffield Resources’s board and the CEO’s back ground.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
