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Calidus Resources Limited's (ASX:CAI) Profit Outlook

Simply Wall St
·3 mins read

Calidus Resources Limited's (ASX:CAI): Calidus Resources Limited engages in the exploration and exploitation of gold minerals in Australia. On 30 June 2019, the AU$56m market-cap posted a loss of -AU$1.2m for its most recent financial year. The most pressing concern for investors is CAI’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for CAI, its year of breakeven and its implied growth rate.

View our latest analysis for Calidus Resources

CAI is bordering on breakeven, according to Metals and Mining analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$18m in 2022. CAI is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, I calculated the rate at which CAI must grow year-on-year. It turns out an average annual growth rate of 67% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:CAI Past and Future Earnings, February 3rd 2020
ASX:CAI Past and Future Earnings, February 3rd 2020

I’m not going to go through company-specific developments for CAI given that this is a high-level summary, but, bear in mind that by and large 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one aspect worth mentioning. CAI currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of debt relative to its equity. This means that CAI has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of CAI to cover in one brief article, but the key fundamentals for the company can all be found in one place – CAI’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:

  1. Historical Track Record: What has CAI'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Calidus Resources’s board and the CEO’s back ground.

  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.