We feel now is a pretty good time to analyse Americas Gold and Silver Corporation's (TSE:USA) business as it appears the company may be on the cusp of a considerable accomplishment. Americas Gold and Silver Corporation engages in the acquisition, evaluation, exploration, development, and operation of precious and polymetallic mineral properties in North America. The company’s loss has recently broadened since it announced a US$33m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$33m, moving it further away from breakeven. The most pressing concern for investors is Americas Gold and Silver's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 4 industry analysts covering Americas Gold and Silver, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$30m in 2021. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 157% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Americas Gold and Silver given that this is a high-level summary, however, 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 12% 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.
This article is not intended to be a comprehensive analysis on Americas Gold and Silver, so if you are interested in understanding the company at a deeper level, take a look at Americas Gold and Silver's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
Valuation: What is Americas 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 Americas Gold and Silver is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Americas Gold and Silver’s board and the CEO’s background.
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. 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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