When Will Matador Mining Limited (ASX:MZZ) Become Profitable?

We feel now is a pretty good time to analyse Matador Mining Limited's (ASX:MZZ) business as it appears the company may be on the cusp of a considerable accomplishment. Matador Mining Limited engages in the mining and mineral exploration activities. The company’s loss has recently broadened since it announced a AU$3.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$5.3m, moving it further away from breakeven. As path to profitability is the topic on Matador Mining's 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.

View our latest analysis for Matador Mining

Expectations from some of the Australian Metals and Mining analysts is that Matador Mining is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$83m in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 138% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Matador Mining's growth isn’t the focus of this broad overview, however, take into account that generally 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 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 Matador Mining has no debt on its balance sheet, which is quite unusual for a cash-burning 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:

There are key fundamentals of Matador Mining 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 Matador Mining, take a look at Matador Mining's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Matador 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 Matador 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 Matador 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.