Syrah Resources Limited's (ASX:SYR) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at Syrah Resources Limited's (ASX:SYR) future prospects. Syrah Resources Limited, together with its subsidiaries, engages in the exploration, evaluation, and development of mineral properties in China, Europe, India, other Asian countries, the Americas, and internationally. The AU$616m market-cap company’s loss lessened since it announced a US$61m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$57m, as it approaches breakeven. The most pressing concern for investors is Syrah Resources' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Syrah Resources

Syrah Resources is bordering on breakeven, according to the 2 Australian Metals and Mining analysts. They expect the company to post a final loss in 2022, before turning a profit of US$23m in 2023. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 90% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Underlying developments driving Syrah Resources' growth isn’t the focus of this broad overview, but, keep in mind that generally 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 we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 21% 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 key fundamentals of Syrah Resources 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 Syrah Resources, take a look at Syrah Resources' company page on Simply Wall St. We've also put together a list of essential factors you should further research:

1. 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.

2. 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.

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.

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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