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Analysts Are Optimistic We'll See A Profit From Gran Colombia Gold Corp. (TSE:GCM)

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·3 min read
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Gran Colombia Gold Corp. (TSE:GCM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Gran Colombia Gold Corp., together with its subsidiaries, engages in the acquisition, exploration, development, and operation of gold and silver properties primarily in Colombia. On 31 December 2020, the CA$352m market-cap company posted a loss of US$4.7m for its most recent financial year. The most pressing concern for investors is Gran Colombia 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 Gran Colombia Gold

Gran Colombia Gold is bordering on breakeven, according to the 2 Canadian Metals and Mining analysts. They expect the company to post a final loss in 2020, before turning a profit of US$102m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 80% is expected, 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

We're not going to go through company-specific developments for Gran Colombia Gold given that this is a high-level summary, however, take into account 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. Gran Colombia Gold currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Gran Colombia Gold's case is 71%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Gran Colombia Gold 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 Gran Colombia Gold, take a look at Gran Colombia Gold's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

  1. Valuation: What is Gran Colombia 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 Gran Colombia 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 Gran Colombia 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.

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.