Sierra Madre Gold and Silver Ltd. (CVE:SM) Could Be Less Than A Year Away From Profitability

Sierra Madre Gold and Silver Ltd. (CVE:SM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sierra Madre Gold and Silver Ltd. operates as a precious metal development and exploration company in Mexico. With the latest financial year loss of US$4.1m and a trailing-twelve-month loss of US$282k, the CA$169m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Sierra Madre Gold and Silver's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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According to the 2 industry analysts covering Sierra Madre Gold and Silver, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$5.5m in 2025. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 39% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Sierra Madre Gold and Silver'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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Check out our latest analysis for Sierra Madre Gold and Silver

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 20% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Sierra Madre Gold and Silver to cover in one brief article, but the key fundamentals for the company can all be found in one place – Sierra Madre Gold and Silver's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:

1. Valuation: What is Sierra Madre Gold and Silver 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 Sierra Madre Gold and Silver 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 Sierra Madre Gold and Silver’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. 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.