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MP Materials Corp. (NYSE:MP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. MP Materials Corp. owns and operates integrated rare earth mining and processing facilities. With the latest financial year loss of US$6.8m and a trailing-twelve-month loss of US$45m, the US$6.4b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is MP Materials' 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.
According to the 2 industry analysts covering MP Materials, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$45m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 47% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving MP Materials' growth isn’t the focus of this broad overview, however, take into account that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. MP Materials currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
There are key fundamentals of MP Materials 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 MP Materials, take a look at MP Materials' company page on Simply Wall St. We've also put together a list of key aspects you should further research:
Valuation: What is MP Materials 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 MP Materials 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 MP Materials’s 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.
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. 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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