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Syrah Resources Limited’s (ASX:SYR): Syrah Resources Limited, together with its subsidiaries, engages in the exploration, evaluation, and development of mineral properties in Mozambique. The company’s loss has recently broadened since it announced a -US$12.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$13.8m, moving it further away from breakeven. As path to profitability is the topic on SYR’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for SYR.
SYR is bordering on breakeven, according to the 7 Metals and Mining analysts. They expect the company to post a final loss in 2018, before turning a profit of US$2.9m in 2019. Therefore, SYR is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which SYR must grow year-on-year. It turns out an average annual growth rate of 52% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving SYR’s growth isn’t the focus of this broad overview, but, take into account that typically 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. SYR has managed its capital judiciously, with debt making up 0.3% of equity. This means that SYR has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on SYR, so if you are interested in understanding the company at a deeper level, take a look at SYR’s company page on Simply Wall St. I’ve also put together a list of key factors you should further examine:
- Valuation: What is SYR 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 SYR 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 Syrah 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 firstname.lastname@example.org.