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First Majestic Silver Corp. (TSE:FR) Is Expected To Breakeven In The Near Future

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Simply Wall St
·3 min read
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First Majestic Silver Corp. (TSE:FR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. First Majestic Silver Corp. engages in the acquisition, exploration, development, and production of mineral properties with a focus on silver production in Mexico. The company’s loss has recently broadened since it announced a US$40m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$51m, moving it further away from breakeven. Many investors are wondering about the rate at which First Majestic Silver will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for First Majestic Silver

First Majestic Silver is bordering on breakeven, according to the 3 Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$145m in 2021. So, the company is predicted to breakeven just over a year 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 111% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving First Majestic Silver's growth isn’t the focus of this broad overview, however, take into account that generally 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 19% 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 First Majestic Silver to cover in one brief article, but the key fundamentals for the company can all be found in one place – First Majestic Silver's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

  1. Valuation: What is First Majestic Silver 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 First Majestic Silver is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on First Majestic Silver’s 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.