Sherritt International Corporation (TSE:S) found the way to profitability

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Sherritt International Corporation (TSE:S) may be approaching a major achievement in his company, so we’d like to shed some light on the company. Sherritt International Corporation is engaged in the mining, refining and sale of nickel and cobalt from lateritic sources primarily in Canada and Cuba. The C$322 million market capitalization company announced a final loss of C$13 million on December 31, 2021 for its most recent fiscal year result. Since the path to profitability is what Sherritt International investors are concerned about, we decided to gauge market sentiment. In this article, we’ll discuss the company’s growth expectations and when analysts expect it to become profitable.

See our latest analysis for Sherritt International

According to the 3 industry analysts covering Sherritt International, the consensus is that the break-even point is near. They forecast that the business will incur a terminal loss in 2021, before generating positive profits of C$61 million in 2022. The business should therefore break even in about 12 months or less. We calculated the rate at which the business must grow to reach the consensus forecast predicting breakeven within 12 months. It turns out that an average annual growth rate of 27% is expected, which is rather optimistic! If the business grows at a slower rate, it will become profitable later than expected.

TSX:S Earnings per share growth March 27, 2022

We are not going to review company-specific developments for Sherritt International as this is a high-level summary, but please consider that metals and mining companies , depending on the stage of mining and the metals mined, have irregular cash periods. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before concluding, there is one issue worth mentioning. Sherritt International currently has a relatively high level of debt. Generally, the rule of thumb is that debt should not exceed 40% of your equity, which in the case of Sherritt International is 76%. Note that higher debt increases the risk of investing in the loss-making business.

Next steps:

This article is not intended to be a comprehensive analysis of Sherritt International, so if you’re interested in understanding the company on a deeper level, take a look at Sherritt International’s company page on Simply Wall St. We have also compiled a list of relevant aspects that you should consider:

  1. Evaluation: What is Sherritt International worth today? Has future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Sherritt International is currently being mispriced by the market.
  2. Management team: An experienced management team at the helm increases our confidence in the company – take a look at who sits on Sherritt International’s board and the CEO’s background.
  3. Other High Performing Stocks: Are there other stocks that offer better prospects with a proven track record? Explore our free list of these great stocks here.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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