Stock Analysis

Analysts Expect Breakeven For Calidus Resources Limited (ASX:CAI) Before Long

ASX:CAI
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Calidus Resources Limited (ASX:CAI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Calidus Resources Limited engages in the exploration and exploitation of gold minerals in Australia. The AU$139m market-cap company announced a latest loss of AU$2.1m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Calidus Resources' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Calidus Resources

According to some industry analysts covering Calidus Resources, breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of AU$99m in 2023. Therefore, the company is expected to breakeven roughly 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 90% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
ASX:CAI Earnings Per Share Growth December 16th 2020

Given this is a high-level overview, we won’t go into details of Calidus Resources' upcoming projects, though, 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Calidus Resources has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high 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:

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

  1. Valuation: What is Calidus 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 Calidus Resources 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 Calidus Resources’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. 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.
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