Analysts Expect EQ Resources Limited (ASX:EQR) To Breakeven Soon

EQ Resources Limited (ASX:EQR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. EQ Resources Limited explores for and produces tungsten and gold mineral resources in Queensland and New South Wales, Australia. On 30 June 2023, the AU$124m market-cap company posted a loss of AU$3.7m for its most recent financial year. As path to profitability is the topic on EQ Resources' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for EQ Resources

Expectations from some of the Australian Metals and Mining analysts is that EQ Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$74m in 2024. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 21% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving EQ 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 32% 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:

This article is not intended to be a comprehensive analysis on EQ Resources, so if you are interested in understanding the company at a deeper level, take a look at EQ Resources' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

1. Valuation: What is EQ 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 EQ Resources is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on EQ Resources’s board and the CEO’s background.
3. 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.