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With the business potentially at an important milestone, we thought we'd take a closer look at Americas Gold and Silver Corporation's (TSE:USA) future prospects. Americas Gold and Silver Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral properties in the Americas. The company’s loss has recently broadened since it announced a US$35m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$43m, moving it further away from breakeven. The most pressing concern for investors is Americas Gold and Silver's path to profitability – when will it 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 Americas Gold and Silver
Americas Gold and Silver is bordering on breakeven, according to the 2 Canadian Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of US$11m in 2025. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 158% 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.
We're not going to go through company-specific developments for Americas Gold and Silver given that this is a high-level summary, but, bear in mind that by and large 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 Americas Gold and Silver is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Americas Gold and Silver's case is 52%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Americas Gold and Silver, so if you are interested in understanding the company at a deeper level, take a look at Americas Gold and Silver's company page on Simply Wall St. We've also put together a list of key aspects you should further examine: