Analysts Are Optimistic We'll See A Profit From Trevali Mining Corporation (TSE:TV)

·3 min read

Trevali Mining Corporation (TSE:TV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Trevali Mining Corporation, a base-metals mining company, engages in the acquisition, exploration, and development of mineral properties. With the latest financial year loss of US$239m and a trailing-twelve-month loss of US$49m, the CA$237m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Trevali Mining 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.

Check out our latest analysis for Trevali Mining

Consensus from 4 of the Canadian Metals and Mining analysts is that Trevali Mining is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$33m in 2021. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 13% year-on-year, on average, which seems realistic. However, if this rate turns out to be too buoyant, the company may become profitable later than analysts predict.

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

Given this is a high-level overview, we won’t go into details of Trevali Mining's upcoming projects, but, keep in mind that generally 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, a double-digit growth rate is not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Trevali Mining currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Trevali Mining's case is 55%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Trevali Mining, so if you are interested in understanding the company at a deeper level, take a look at Trevali Mining's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

  1. Valuation: What is Trevali Mining 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 Trevali Mining 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 Trevali Mining’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.

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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