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Nevada Copper Corp. (TSE:NCU) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Nevada Copper Corp. engages in the exploration, development, and operation of mineral properties in Nevada. With the latest financial year loss of US$20m and a trailing-twelve-month loss of US$24m, the CA$139m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Nevada Copper will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 3 of the Canadian Metals and Mining analysts is that Nevada Copper is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$11m in 2022. The company is therefore projected 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 77% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Nevada Copper's growth isn’t the focus of this broad overview, though, bear in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high 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 issue worth mentioning. Nevada Copper currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Nevada Copper's case is 50%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Nevada Copper 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 Nevada Copper, take a look at Nevada Copper's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
Valuation: What is Nevada Copper 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 Nevada Copper 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 Nevada Copper’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.
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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