Syrah Resources Limited (ASX:SYR): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at Syrah Resources Limited's (ASX:SYR) future prospects. Syrah Resources Limited, together with its subsidiaries, engages in the exploration, evaluation, and development of mineral properties in Australia, China, Europe, India, the Americas, and internationally. The AU$254m market-cap company posted a loss in its most recent financial year of US$85m and a latest trailing-twelve-month loss of US$114m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Syrah Resources' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Syrah Resources

Syrah Resources is bordering on breakeven, according to the 3 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$26m in 2026. 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 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, 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.

Underlying developments driving Syrah Resources' growth isn’t the focus of this broad overview, but, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Syrah Resources currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Syrah Resources' case is 48%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Syrah Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Syrah Resources' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

1. Historical Track Record: What has Syrah Resources' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Syrah Resources' 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.