Continental Gold Inc’s (TSE:CNL): Continental Gold Inc., together with its subsidiaries, engages in the acquisition, exploration, evaluation, and development of gold resource properties in Colombia. The company’s loss has recently broadened since it announced a -US$7.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$18.3m, moving it further away from breakeven. As path to profitability is the topic on CNL’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for CNL’s growth and when analysts expect the company to become profitable.
Expectation from Metals and Mining analysts is CNL is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$1.8m in 2020. So, CNL is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which CNL must grow year-on-year. It turns out an average annual growth rate of 107% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, CNL may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of CNL’s upcoming projects, though, keep 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I would like to bring into light with CNL is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in CNL’s case is 59%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of CNL to cover in one brief article, but the key fundamentals for the company can all be found in one place – CNL’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:
- Valuation: What is CNL 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 CNL is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Continental Gold’s board and the CEO’s back ground.
- 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 email@example.com.