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When Will Matador Mining Limited (ASX:MZZ) Become Profitable?

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·3 min read
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Matador Mining Limited (ASX:MZZ) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Matador Mining Limited engages in the mining and mineral exploration activities. The company’s loss has recently broadened since it announced a AU$2.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$2.5m, moving it further away from breakeven. As path to profitability is the topic on Matador Mining's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Matador Mining

According to the 2 industry analysts covering Matador Mining, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of AU$88m in 2024. So, the company is predicted to breakeven approximately 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 62%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

We're not going to go through company-specific developments for Matador Mining given that this is a high-level summary, however, bear in mind that by and large 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Matador Mining currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. The company 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 Matador Mining, so if you are interested in understanding the company at a deeper level, take a look at Matador Mining's company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:

  1. Valuation: What is Matador Mining 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 Matador Mining 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 Matador Mining’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. 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.

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