Guanajuato Silver Company Ltd. (CVE:GSVR) Could Be Less Than A Year Away From Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at Guanajuato Silver Company Ltd.'s (CVE:GSVR) future prospects. Guanajuato Silver Company Ltd. acquires, explores for, develops, and evaluates mineral assets in Canada and Mexico. On 31 December 2022, the CA$185m market-cap company posted a loss of US$27m for its most recent financial year. The most pressing concern for investors is Guanajuato Silver's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Guanajuato Silver
Guanajuato Silver is bordering on breakeven, according to the 3 Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$7.7m in 2023. 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 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 127% year-on-year, on average, which is rather optimistic! 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 Guanajuato Silver given that this is a high-level summary, however, bear in mind that typically 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.
One thing we would like to bring into light with Guanajuato Silver is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Guanajuato Silver's case is 51%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Guanajuato Silver to cover in one brief article, but the key fundamentals for the company can all be found in one place – Guanajuato Silver's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:
Valuation: What is Guanajuato 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 Guanajuato 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 Guanajuato 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
