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Trevali Mining Corporation (TSE:TV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Trevali Mining Corporation, a base-metals mining company, engages in the acquisition, exploration, and development of mineral properties. On 31 December 2020, the CA$198m market-cap company posted a loss of US$239m for its most recent financial year. The most pressing concern for investors is Trevali Mining'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.
Trevali Mining is bordering on breakeven, according to the 6 Canadian Metals and Mining analysts. They expect the company to post a final loss in 2020, before turning a profit of US$41m 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 65% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Trevali Mining's upcoming projects, but, keep in mind that generally 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. Trevali Mining currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Trevali Mining's case is 59%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Trevali Mining, so if you are interested in understanding the company at a deeper level, take a look at Trevali Mining's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:
Valuation: What is Trevali Mining 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 Trevali Mining 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 Trevali Mining’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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