Continental Gold Inc (TSE:CNL): Are Analysts Optimistic?
Continental Gold Inc’s (TSX:CNL): Continental Gold Inc., together with its subsidiaries, acquires, explores for, evaluates, and develops gold resource properties in Colombia. The company’s loss has recently broadened since it announced a -US$4.81M loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$7.21M, moving it further away from breakeven. The most pressing concern for investors is CNL’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for CNL, its year of breakeven and its implied growth rate.
View our latest analysis for Continental Gold
Expectation from analysts is CNL is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$66.60M in 2020. Therefore, CNL is expected to breakeven roughly 2 years from today. What rate will CNL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 40.38%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for CNL given that this is a high-level summary, but, bear in mind that generally 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 I wrap up, there’s one aspect worth mentioning. CNL has managed its capital prudently, with debt making up 12.36% of equity. This means that CNL 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 too many aspects of CNL to cover in one brief article, but the key fundamentals for the company can all be found in one place – CNL’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:
Historical Track Record: What has CNL’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 Continental Gold’s board and the CEO’s back ground.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
