Breakeven Is Near for Kopy Goldfields AB (publ) (STO:KOPY)

We feel now is a pretty good time to analyse Kopy Goldfields AB (publ)'s (STO:KOPY) business as it appears the company may be on the cusp of a considerable accomplishment. Kopy Goldfields AB (publ) operates as a gold exploration and production company in Russia. The kr2.2b market-cap company posted a loss in its most recent financial year of kr3.7m and a latest trailing-twelve-month loss of kr17m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Kopy Goldfields will turn a profit, with the big question being “when will the company breakeven?” 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 Kopy Goldfields

Kopy Goldfields is bordering on breakeven, according to some Swedish Metals and Mining analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of kr221m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 26% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Kopy Goldfields' growth isn’t the focus of this broad overview, however, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Kopy Goldfields currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Kopy Goldfields' case is 50%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Kopy Goldfields, so if you are interested in understanding the company at a deeper level, take a look at Kopy Goldfields' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Valuation: What is Kopy Goldfields 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 Kopy Goldfields 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 Kopy Goldfields’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. 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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