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Orion Minerals Limited’s (ASX:ORN): Orion Minerals Limited explores for, evaluates, and develops mineral properties in Australia and South Africa. The AU$47m market-cap company announced a latest loss of -AU$8.4m on 30 June 2018 for its most recent financial year result. As path to profitability is the topic on ORN’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for ORN’s growth and when analysts expect the company to become profitable.
View our latest analysis for Orion Minerals
ORN is bordering on breakeven, according to Metals and Mining analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$22m in 2020. Therefore, ORN is expected to breakeven roughly a couple of months from now! What rate will ORN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 53%, 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 ORN’s growth isn’t the focus of this broad overview, however, bear in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. ORN currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ORN’s case is 84%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on ORN, so if you are interested in understanding the company at a deeper level, take a look at ORN’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further examine:
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Historical Track Record: What has ORN’s 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.
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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 Orion Minerals’s board and the CEO’s back ground.
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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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.