VRX Silica Limited's (ASX:VRX): VRX Silica Limited engages in the exploration, evaluation, and development of mineral properties in Australia. With the latest financial year loss of -AU$1.8m and a trailing-twelve month of -AU$3.1m, the AU$46m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which VRX will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for VRX’s growth and when analysts expect the company to become profitable.
VRX is bordering on breakeven, according to Metals and Mining analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$10m in 2022. So, VRX is predicted to breakeven approximately 3 years from now. How fast will VRX 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 58% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, VRX may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for VRX given that this is a high-level summary, but, keep in mind that typically 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.
Before I wrap up, there’s one aspect worth mentioning. VRX 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. VRX currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are too many aspects of VRX to cover in one brief article, but the key fundamentals for the company can all be found in one place – VRX’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:
- Historical Track Record: What has VRX'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 VRX Silica’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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.