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Galantas Gold Corporation (CVE:GAL) Has Found A Path To Profitability

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·2-min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Galantas Gold Corporation's (CVE:GAL) future prospects. Galantas Gold Corporation acquires, explores for, and develops gold properties primarily in Omagh, Northern Ireland. The CA$46m market-cap company announced a latest loss of CA$5.3m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Galantas Gold'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.

View our latest analysis for Galantas Gold

According to some industry analysts covering Galantas Gold, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$3.3m in 2022. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 79%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Galantas Gold's growth isn’t the focus of this broad overview, however, bear in mind 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 22% 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.

Next Steps:

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

  1. Valuation: What is Galantas Gold 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 Galantas Gold 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 Galantas Gold’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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