Metals X Limited (ASX:MLX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Metals X Limited engages in the production of tin in Australia. The AU$200m market-cap company’s loss lessened since it announced a AU$80m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$58m, as it approaches breakeven. The most pressing concern for investors is Metals X's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Metals X is bordering on breakeven, according to some Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$63m in 2022. Therefore, the company is expected to breakeven just over a year from now. How fast will the company 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 81% year-on-year, on average, 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, we won’t go into details of Metals X's upcoming projects, though, keep in mind that generally 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one issue worth mentioning. Metals X currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Metals X's case is 43%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of Metals X which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Metals X, take a look at Metals X's company page on Simply Wall St. We've also put together a list of key factors you should look at:
Valuation: What is Metals X 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 Metals X 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 Metals X’s board and the CEO’s background.
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.
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