Metro Mining Limited (ASX:MMI) On The Verge Of Breaking Even

We feel now is a pretty good time to analyse Metro Mining Limited's (ASX:MMI) business as it appears the company may be on the cusp of a considerable accomplishment. Metro Mining Limited, together with its subsidiaries, operates as an exploration and mining company in China. The AU$150m market-cap company announced a latest loss of AU$13m on 31 December 2023 for its most recent financial year result. As path to profitability is the topic on Metro Mining's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Metro Mining

According to some industry analysts covering Metro Mining, breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$52m in 2024. So, the company is predicted to breakeven approximately 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 29% 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.

Underlying developments driving Metro Mining's growth isn’t the focus of this broad overview, though, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Metro Mining is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Metro Mining 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 Metro Mining 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 Metro Mining’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.