Advertisement
Australia markets open in 7 hours 15 minutes
  • ALL ORDS

    8,209.20
    -63.50 (-0.77%)
     
  • AUD/USD

    0.6685
    -0.0026 (-0.38%)
     
  • ASX 200

    7,971.60
    -64.90 (-0.81%)
     
  • OIL

    80.25
    -2.57 (-3.10%)
     
  • GOLD

    2,402.80
    -53.60 (-2.18%)
     
  • Bitcoin AUD

    100,398.57
    +367.92 (+0.37%)
     
  • CMC Crypto 200

    1,383.18
    +52.29 (+3.93%)
     

Loss-Making Calidus Resources Limited (ASX:CAI) Expected To Breakeven In The Medium-Term

Calidus Resources Limited (ASX:CAI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Calidus Resources Limited engages in the exploration and exploitation of gold minerals in Australia. The AU$95m market-cap company posted a loss in its most recent financial year of AU$6.1m and a latest trailing-twelve-month loss of AU$20m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Calidus Resources' investors mind, we've decided to gauge market sentiment. 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 Calidus Resources

According to some industry analysts covering Calidus Resources, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$41m in 2025. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Calidus Resources' upcoming projects, however, keep 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

ADVERTISEMENT

Before we wrap up, there’s one issue worth mentioning. Calidus Resources currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Calidus Resources' case is 51%. 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 Calidus Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Calidus Resources' company page on Simply Wall St. We've also put together a list of important factors you should further examine:

  1. Valuation: What is Calidus Resources 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 Calidus Resources is currently mispriced by the market.

  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 background.

  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.

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.