Stock Analysis

CryptoStar Corp. (CVE:CSTR) Could Be Less Than A Year Away From Profitability

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CryptoStar Corp. (CVE:CSTR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. CryptoStar Corp. engages in cryptocurrency mining operations with data centers in Canada and the United States. The CA$15m market-cap company posted a loss in its most recent financial year of US$3.5m and a latest trailing-twelve-month loss of US$7.1m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is CryptoStar's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for CryptoStar

Expectations from some of the Canadian IT analysts is that CryptoStar is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$400k in 2023. 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 119% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSXV:CSTR Earnings Per Share Growth March 18th 2023

Underlying developments driving CryptoStar's growth isn’t the focus of this broad overview, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. CryptoStar currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of 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:

There are too many aspects of CryptoStar to cover in one brief article, but the key fundamentals for the company can all be found in one place – CryptoStar's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has CryptoStar's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on CryptoStar'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.

Valuation is complex, but we're helping make it simple.

Find out whether CryptoStar is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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