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Analysts Are Optimistic We'll See A Profit From Aya Gold & Silver Inc. (TSE:AYA)

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·3 min read
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We feel now is a pretty good time to analyse Aya Gold & Silver Inc.'s (TSE:AYA) business as it appears the company may be on the cusp of a considerable accomplishment. Aya Gold & Silver Inc., together with its subsidiaries, engages in the acquisition, exploration, evaluation, and development of mining properties in Morocco. With the latest financial year loss of US$659k and a trailing-twelve-month loss of US$5.3m, the CA$365m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Aya Gold & Silver's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Aya Gold & Silver

According to the 2 industry analysts covering Aya Gold & Silver, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$12m in 2021. Therefore, the company is expected to breakeven roughly 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 59% 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

Underlying developments driving Aya Gold & Silver's growth isn’t the focus of this broad overview, but, bear in mind that generally 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 0.9% 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:

There are key fundamentals of Aya Gold & Silver which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Aya Gold & Silver, take a look at Aya Gold & Silver's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

  1. Valuation: What is Aya Gold & Silver 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 Aya Gold & Silver 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 Aya Gold & Silver’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.

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.

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