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With the business potentially at an important milestone, we thought we'd take a closer look at Hummingbird Resources PLC's (LON:HUM) future prospects. Hummingbird Resources PLC engages in the exploration, evaluation, and development of mineral properties in Liberia, Mali, and Guinea. On 31 December 2023, the UK£54m market-cap company posted a loss of US$24m for its most recent financial year. As path to profitability is the topic on Hummingbird Resources' 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 Hummingbird Resources
Hummingbird Resources is bordering on breakeven, according to some British Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of US$98m in 2025. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 139% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Hummingbird Resources given that this is a high-level summary, but, take into account that typically 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we would like to bring into light with Hummingbird Resources is its debt-to-equity ratio of 100%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Hummingbird Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Hummingbird Resources' company page on Simply Wall St. We've also put together a list of key factors you should further examine:
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Valuation: What is Hummingbird 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 Hummingbird Resources is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Hummingbird Resources’s board and the CEO’s background.
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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.