We think now is the right time to analyze Sherritt International Corporation (TSE: S) because it looks like the company is on the cusp of a huge accomplishment. Sherritt International Corporation is engaged in the extraction, refining and sale of nickel and cobalt from lateritic ores primarily in Europe, Japan and China. The C $ 258 million market-capitalization company reported a final loss of C $ 86 million on December 31, 2020 for its most recent year results. Many investors question the rate at which Sherritt International will make a profit, the big question being “when does the company break even?” Below, we’ll provide a high-level summary of industry analyst expectations for the company.
See our latest review for Sherritt International
Sherritt International is close to equilibrium, according to 2 analysts from Canadian Metals and Mining. They expect the company to post a terminal loss in 2020, before making a profit of C $ 39 million in 2021. Therefore, the company should break even in about a year or less! We calculated the rate at which the company must grow to reach the consensus forecast for equilibrium within 12 months. It turns out that an average annual growth rate of 36% is expected, which is rather optimistic! If the business grows at a slower pace, it will become profitable later than expected.
We are not going to go over company specific developments for Sherritt International as this is a high level summary, however, be aware that, on the whole, metallurgical companies and mining, depending on the stage of mining and the metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the business is currently in an investment period.
Before concluding, there is one problem worth mentioning. Sherritt International currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Sherritt International’s case is 72%. A higher level of debt requires tighter capital management, which increases the risk of investing in the loss-making company.
This article is not intended to be a comprehensive analysis of Sherritt International, so if you want to understand the business on a deeper level, take a look at the Sherritt International business page on Simply Wall St. We have also made a list of essential factors that you should consider:
- Evaluation: What is Sherritt International worth today? Has the potential for future growth already been factored into the price? The intrinsic value infographic in our free research report helps to visualize whether Sherritt International is currently being poorly valued by the market.
- Management team: An experienced management team at the helm increases our confidence in the company – take a look at Sherritt International board members and the CEO’s background.
- Other high performing stocks: Are there other stocks that offer better prospects with a proven track record? Check out our free list of these great stocks here.
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