Core Exploration Limited’s (ASX:CXO) Profit Outlook
Core Exploration Limited’s (ASX:CXO): Core Exploration Limited engages in the discovery and exploration of mineral deposits in Northern Territory and South Australia. The AU$30m market-cap company announced a latest loss of -AU$2m on 30 June 2018 for its most recent financial year result. The most pressing concern for investors is CXO’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for CXO, its year of breakeven and its implied growth rate.
Check out our latest analysis for Core Exploration
Expectation from Metals and Mining analysts is CXO is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$29m in 2020. So, CXO is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which CXO must grow year-on-year. It turns out an average annual growth rate of 50% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, CXO may become profitable much later than analysts predict.
Underlying developments driving CXO’s growth isn’t the focus of this broad overview, though, keep in mind 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.
One thing I’d like to point out is that CXO has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. CXO currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on CXO, so if you are interested in understanding the company at a deeper level, take a look at CXO’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:
Historical Track Record: What has CXO’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 Core Exploration’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.
