We feel now is a pretty good time to analyse Syrah Resources Limited's (ASX:SYR) business as it appears the company may be on the cusp of a considerable accomplishment. Syrah Resources Limited, together with its subsidiaries, engages in the exploration, evaluation, and development of mineral properties in China, Europe, India, other Asian countries, the Americas, and internationally. On 31 December 2020, the AU$705m market-cap company posted a loss of US$61m for its most recent financial year. Many investors are wondering about the rate at which Syrah Resources will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Syrah Resources
Consensus from 2 of the Australian Metals and Mining analysts is that Syrah Resources is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$11m in 2023. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 72% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
earnings-per-share-growth
ASX:SYR Earnings Per Share Growth July 29th 2021
Underlying developments driving Syrah Resources' growth isn’t the focus of this broad overview, but, keep in mind that generally 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 we’d like to point out is that The company has managed its capital judiciously, with debt making up 14% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Syrah Resources 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 Syrah Resources, take a look at Syrah Resources' company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:
Historical Track Record: What has Syrah Resources' 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 Syrah Resources' 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.
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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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