Analysts Are Optimistic We'll See A Profit From Orla Mining Ltd. (TSE:OLA)
With the business potentially at an important milestone, we thought we'd take a closer look at Orla Mining Ltd.'s (TSE:OLA) future prospects. Orla Mining Ltd. acquires, explores for, and develops mineral properties. With the latest financial year loss of US$28m and a trailing-twelve-month loss of US$29m, the CA$1.5b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Orla Mining's investors mind, we've decided to gauge market sentiment. 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 Orla Mining
Orla Mining is bordering on breakeven, according to the 2 Canadian Metals and Mining analysts. They expect the company to post a final loss in 2021, before turning a profit of US$64m in 2022. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which is extremely buoyant. 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 Orla Mining's upcoming projects, however, keep 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one issue worth mentioning. Orla Mining currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Orla Mining's case is 65%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Orla Mining to cover in one brief article, but the key fundamentals for the company can all be found in one place – Orla Mining's company page on Simply Wall St. We've also put together a list of key aspects you should look at:
Historical Track Record: What has Orla Mining's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Orla 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.
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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.
