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Matador Mining Limited (ASX:MZZ) Is Expected To Breakeven In The Near Future

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Simply Wall St
·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 AU$62m market-cap company announced a latest loss of AU$2.5m on 30 June 2020 for its most recent financial year result. Many investors are wondering about the rate at which Matador Mining will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Matador Mining

Matador Mining is bordering on breakeven, according to the 3 Australian Metals and Mining analysts. They expect the company to post a final loss in 2022, before turning a profit of AU$36m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which is rather optimistic! 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

Underlying developments driving Matador Mining's growth isn’t the focus of this broad overview, though, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Matador Mining 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. 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 essential aspects you should further examine:

  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. 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.