When Will Prospect Resources Limited (ASX:PSC) Breakeven?
Prospect Resources Limited's (ASX:PSC): Prospect Resources Limited engages in exploration, evaluation, and development of mineral properties in Zimbabwe. On 30 June 2019, the AU$44m market-cap posted a loss of -AU$5.9m for its most recent financial year. Many investors are wondering the rate at which PSC will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PSC.
Check out our latest analysis for Prospect Resources
According to the industry analysts covering PSC, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$107m in 2022. PSC is therefore projected to breakeven around 2 years from today. How fast will PSC have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 113% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, PSC may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of PSC’s upcoming projects, but, take into account that by and large 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.
One thing I’d like to point out is that PSC 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. PSC 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:
There are too many aspects of PSC to cover in one brief article, but the key fundamentals for the company can all be found in one place – PSC’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further examine:
Historical Track Record: What has PSC'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 Prospect 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.
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