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Greatland Gold plc's (LON:GGP) Profit Outlook

We feel now is a pretty good time to analyse Greatland Gold plc's (LON:GGP) business as it appears the company may be on the cusp of a considerable accomplishment. Greatland Gold plc engages in the exploration and development of precious and base metals in the United Kingdom and Australia. On 30 June 2022, the UK£430m market-cap company posted a loss of UK£11m for its most recent financial year. Many investors are wondering about the rate at which Greatland Gold will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Greatland Gold

Consensus from 2 of the British Metals and Mining analysts is that Greatland Gold is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of UK£63m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 106% 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.

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

Given this is a high-level overview, we won’t go into details of Greatland Gold's upcoming projects, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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Before we wrap up, there’s one issue worth mentioning. Greatland Gold currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Greatland Gold to cover in one brief article, but the key fundamentals for the company can all be found in one place – Greatland Gold's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

  1. Valuation: What is Greatland 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 Greatland 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 Greatland 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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