First Cobalt Corp. (CVE:FCC): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at First Cobalt Corp.'s (CVE:FCC) future prospects. First Cobalt Corp. acquires and explores for resource properties in the United States and Canada. The company’s loss has recently broadened since it announced a CA$2.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$7.5m, moving it further away from breakeven. Many investors are wondering about the rate at which First Cobalt will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for First Cobalt

First Cobalt is bordering on breakeven, according to the 2 Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$35m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 104%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for First Cobalt given that this is a high-level summary, but, keep in mind 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’d like to point out is that First Cobalt 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on First Cobalt, so if you are interested in understanding the company at a deeper level, take a look at First Cobalt's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is First Cobalt 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 First Cobalt 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 First Cobalt’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.

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.

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