Breakeven Is Near for Orla Mining Ltd. (TSE:OLA)

By
Simply Wall St
Published
January 10, 2022
TSX:OLA
Source: Shutterstock

Orla Mining Ltd. (TSE:OLA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Orla Mining Ltd. acquires, explores for, and develops mineral properties. With the latest financial year loss of US$28m and a trailing-twelve-month loss of US$29m, the CA$1.1b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Orla Mining's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Orla Mining

According to the 3 industry analysts covering Orla Mining, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$58m in 2022. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 110%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
TSX:OLA Earnings Per Share Growth January 10th 2022

Given this is a high-level overview, we won’t go into details of Orla Mining's upcoming projects, though, keep in mind 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Orla Mining is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Orla Mining's case is 65%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Orla Mining which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Orla Mining, take a look at Orla Mining's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

  1. Valuation: What is Orla Mining 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 Orla Mining 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 Orla Mining’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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.