Stock Analysis

When Can We Expect A Profit From Mincor Resources NL (ASX:MCR)?

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ASX:MCR
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With the business potentially at an important milestone, we thought we'd take a closer look at Mincor Resources NL's (ASX:MCR) future prospects. Mincor Resources NL engages in the exploration, development, and mining of mineral resources in Australia. The AU$424m market-cap company posted a loss in its most recent financial year of AU$14m and a latest trailing-twelve-month loss of AU$13m shrinking the gap between loss and breakeven. As path to profitability is the topic on Mincor Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Mincor Resources

Mincor Resources is bordering on breakeven, according to the 2 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$18m in 2022. The company is therefore projected to breakeven just over a year from today. 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 55% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:MCR Earnings Per Share Growth April 12th 2021

Given this is a high-level overview, we won’t go into details of Mincor Resources' upcoming projects, however, 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.

Before we wrap up, there’s one aspect worth mentioning. Mincor Resources currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Mincor 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 Mincor 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 Mincor 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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