Breakeven Is Near for Gatos Silver, Inc. (NYSE:GATO)
We feel now is a pretty good time to analyse Gatos Silver, Inc.'s (NYSE:GATO) business as it appears the company may be on the cusp of a considerable accomplishment. Gatos Silver, Inc. engages in the exploration and production of precious metals. With the latest financial year loss of US$35m and a trailing-twelve-month loss of US$12m, the US$323m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Gatos Silver 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 Gatos Silver
Consensus from 2 of the American Metals and Mining analysts is that Gatos Silver is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$9.8m in 2023. The company is therefore projected to breakeven around 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 14% is expected, which seems realistic. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Gatos Silver given that this is a high-level summary, though, keep in mind that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a double-digit 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 judiciously, with debt making up 3.2% 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 Gatos 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 Gatos Silver, take a look at Gatos Silver's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
Valuation: What is Gatos 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 Gatos Silver is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Gatos Silver’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.
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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