Yahoo Finance Syrah Resources Limited (ASX:SYR) About To Shift From Loss To Profit
We feel now is a pretty good time to analyse Syrah Resources Limited's (ASX:SYR) business as it appears the company may be on the cusp of a considerable accomplishment. Syrah Resources Limited, together with its subsidiaries, engages in the exploration, evaluation, and development of mineral properties in Mozambique. With the latest financial year loss of US$57m and a trailing-twelve-month loss of US$42m, the AU$1.6b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Syrah Resources' path to profitability – when will it 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 Syrah Resources
According to the 2 industry analysts covering Syrah Resources, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$10m in 2023. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 126% 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 Syrah Resources' upcoming projects, but, 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.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 15% of equity. This means that it 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 Syrah Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Syrah Resources' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
Historical Track Record: What has Syrah Resources' 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 Syrah Resources' 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.
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.
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