MOD Resources Limited’s (ASX:MOD) Profit Outlook
MOD Resources Limited’s (ASX:MOD): MOD Resources Limited engages in the exploration of copper and silver in Botswana. The AU$66m market-cap posted a loss in its most recent financial year of -AU$3.3m and a latest trailing-twelve-month loss of -AU$3.4m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on MOD’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for MOD’s growth and when analysts expect the company to become profitable.
View our latest analysis for MOD Resources
MOD is bordering on breakeven, according to the 3 Metals and Mining analysts. They expect the company to post a final loss in 2020, before turning a profit of AU$30m in 2021. Therefore, MOD is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, I calculated the rate at which MOD must grow year-on-year. It turns out an average annual growth rate of 42% is expected, which is extremely buoyant. 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 details of MOD’s upcoming projects, but, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that MOD 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. This means that MOD has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of MOD to cover in one brief article, but the key fundamentals for the company can all be found in one place – MOD’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should look at:
Historical Track Record: What has MOD’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 MOD Resources’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.
