Analysts Expect Mandalay Resources Corporation (TSE:MND) To Breakeven Soon
With the business potentially at an important milestone, we thought we'd take a closer look at Mandalay Resources Corporation's (TSE:MND) future prospects. Mandalay Resources Corporation, a natural resource company, engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The CA$157m market-cap company posted a loss in its most recent financial year of US$19m and a latest trailing-twelve-month loss of US$15m shrinking the gap between loss and breakeven. The most pressing concern for investors is Mandalay Resources' 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.
Check out our latest analysis for Mandalay Resources
Expectations from some of the Canadian Metals and Mining analysts is that Mandalay Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$14m in 2020. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 86%, 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.
Given this is a high-level overview, we won’t go into details of Mandalay Resources' upcoming projects, though, keep in mind that by and large 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.
One thing we would like to bring into light with Mandalay Resources is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Mandalay Resources' case is 62%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Mandalay Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Mandalay Resources' company page on Simply Wall St. We've also put together a list of essential factors you should look at:
Valuation: What is Mandalay Resources 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 Mandalay Resources 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 Mandalay Resources’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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