Yahoo Finance When Will Sheffield Resources Limited (ASX:SFX) Breakeven?
Sheffield Resources Limited's (ASX:SFX): Sheffield Resources Limited explores for and develops mineral properties. With the latest financial year loss of -AU$1.7m and a trailing-twelve month of -AU$5.9m, the AU$156m market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on SFX’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SFX’s growth and when analysts expect the company to become profitable.
See our latest analysis for Sheffield Resources
Consensus from the 2 Metals and Mining analysts is SFX is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$69m in 2022. So, SFX is predicted to breakeven approximately 3 years from now. In order to meet this breakeven date, I calculated the rate at which SFX must grow year-on-year. It turns out an average annual growth rate of 54% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, SFX may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SFX’s upcoming projects, but, keep in mind 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.
Before I wrap up, there’s one aspect worth mentioning. SFX has managed its capital prudently, with debt making up 0.3% 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 key fundamentals of SFX which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at SFX, take a look at SFX’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should look at:
Historical Track Record: What has SFX's 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 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
