First Majestic Silver Corp’s (TSX:FR): First Majestic Silver Corp. engages in the acquisition, exploration, development, and production of mineral properties with a focus on silver projects in Mexico. On 31 December 2017, the CA$1.22B market-cap posted a loss of -US$53.27M for its most recent financial year. Many investors are wondering the rate at which FR will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for FR, its year of breakeven and its implied growth rate.
According to the industry analysts covering FR, breakeven is near. They expect the company to post a final loss in 2017, before turning a profit of US$17.84M in 2018. FR is therefore projected to breakeven around a few months from now. How fast will FR have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 81.72% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into detail the detail of FR’s 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.
Before I wrap up, there’s one aspect worth mentioning. FR has managed its capital prudently, with debt making up 7.05% of equity. This means that FR has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of FR which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at FR, take a look at FR’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:
- Valuation: What is FR 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 FR 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 First Majestic Silver’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 pass 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.