Falco Resources Ltd’s (CVE:FPC): Falco Resources Ltd., a junior resource exploration company, engages in acquiring and exploring mineral properties in Canada. The CA$71m market-cap company announced a latest loss of -CA$7m on 30 June 2018 for its most recent financial year result. Many investors are wondering the rate at which FPC will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for FPC.
According to the industry analysts covering FPC, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$3m in 2021. FPC is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which FPC must grow year-on-year. It turns out an average annual growth rate of 64% is expected, 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 FPC’s growth isn’t the focus of this broad overview, however, keep 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. FPC has managed its capital prudently, with debt making up 11% of equity. This means that FPC has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of FPC which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at FPC, take a look at FPC’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
- Historical Track Record: What has FPC’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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Falco Resources’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.