Steppe Gold Ltd. (TSE:STGO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Steppe Gold Ltd. acquires, explores for, develops, and operates precious metals in Mongolia. With the latest financial year loss of US$23m and a trailing-twelve-month loss of US$14m, the CA$78m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Steppe Gold's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Steppe Gold

Consensus from 3 of the Canadian Metals and Mining analysts is that Steppe Gold is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$3.4m in 2022. 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 179% year-on-year, on average, which signals high confidence from analysts. 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 Steppe Gold given that this is a high-level summary, though, bear 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Steppe Gold currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. 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 Steppe Gold, so if you are interested in understanding the company at a deeper level, take a look at Steppe Gold's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Valuation: What is Steppe Gold 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 Steppe Gold 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 Steppe Gold’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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