Yahoo Finance Lundin Gold Inc. (TSE:LUG): Are Analysts Optimistic?
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Lundin Gold Inc.’s (TSE:LUG): Lundin Gold Inc. operates as a mining company in Canada. On 31 December 2018, the CA$1.2b market-cap posted a loss of -US$22.1m for its most recent financial year. As path to profitability is the topic on LUG’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for LUG’s growth and when analysts expect the company to become profitable.
See our latest analysis for Lundin Gold
LUG is bordering on breakeven, according to the 5 Metals and Mining analysts. They expect the company to post a final loss in 2019, before turning a profit of US$45m in 2020. Therefore, LUG is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which LUG must grow year-on-year. It turns out an average annual growth rate of 63% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for LUG given that this is a high-level summary, but, take into account that typically 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.
One thing I would like to bring into light with LUG is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in LUG’s case is 61%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of LUG 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 LUG, take a look at LUG’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:
Valuation: What is LUG 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 LUG 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 Lundin Gold’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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
