Orla Mining Ltd. (ORLA - Get Rating) is expected to soon announce its financial results for the fourth quarter of fiscal year 2023. The consensus revenue estimate of $234.07 million for the year that ended December 2023 reflects a 21.2% year-over-year increase. Also, the company’s revenue estimate of $246.10 million for the ongoing fiscal year exhibits a 5.1% year-over-year growth.

In addition, ORLA’s latest news about the South Railroad Project highlights how much it has progressed in exploring, with a strong chance for further development and that it is still early in its exploration phase. The good outcomes from drilling outside of the expected mining areas point to promising possibilities for the project.

Moreover, the company has made progress since taking over the project by exploring close deposits and increasing its land area around the Carlin Trend. It plans to improve resources at current deposits and widen exploration activities, such as at Pony Creek, which will put ORLA on a path for significant growth.

Additionally, the purchase of 800,000 ordinary shares by Fairfax Financial Holdings shows it believes in ORLA’s potential. This should make ORLA’s financial situation better and help gain the trust of investors. The new capital might help the company to speed up its search for more resources, which could lead to increased worth for those owning shares.

Shares of ORLA have gained 5.5% over the past month. However, it has plunged 16.6% over the past six months to close the last trading session at $3.63.

Here are the fundamental aspects of ORLA that could influence its price performance in the near term:

Mixed Financials

For the third quarter of fiscal 2023 that ended September 30, 2023, ORLA’s revenue increased 23% year-over-year to $60.29 million. Its earnings from mining operations rose 19.1% from the year-ago value to $35.20 million.

However, the company’s income for the period and earnings per share declined 39.6% and 33.3% from the prior year’s period to $5.37 million and $0.02, respectively.

Sound Historical Growth

Over the past three years, ORLA’s tangible book value and total assets increased at a CAGR of 42.1% and 51.5%, respectively. Moreover, over the past five years, they grew at respective CAGRs of 24.9% and 33.1%.

Mixed Profitability

The stock’s trailing-12-month gross profit margin and trailing-12-month EBITDA margin of 73.78% and 51.89% are 159.3% and 201.6% higher than the industry averages of 28.46% and 17.21%, respectively.

However, the company’s trailing-12-month asset turnover ratio and trailing-12-month cash per share of 0.37x and $0.42 are 46.6% and 71.5% lower than the respective industry averages of 0.69x and $1.48.

Stretched Valuation

In terms of forward EV/Sales, ORLA is trading at 5.07x, 213.3% higher than the industry average of 1.62x. Moreover, its forward EV/EBITDA and forward Price/Sales of 10.09x and 5.04x are 21.5% and 294.3% higher than the respective industry averages of 8.31x and 1.28x.

POWR Ratings Exhibit Mixed Prospects

ORLA’s stance is apparent in its POWR Ratings. The stock has an overall rating of C, which translates to Neutral in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. ORLA holds a C grade for Quality, aligning with its moderate profitability measure. Moreover, it has a D grade for Momentum, as it currently trades below both its 10-day and 200-day moving averages of $3.68 and $3.73, respectively.

ORLA is ranked #15 out of 38 stocks in the Miners – Diversified industry. Click here to access ORLA’s Growth, Value, Stability, and Sentiment ratings.

Bottom Line

Although ORLA has good potential for the future, the company’s present profitability measures are average. Moreover, the most recent financial statements show varied results and high valuation, suggesting that investors should wait for a better time to invest in these shares.

How Does Orla Mining Ltd. (ORLA) Stack Up Against Its Peers?

While ORLA has an overall grade of C, equating to a Neutral rating, you may check out these A (Strong Buy) rated and B (Buy) rated stocks within the Miners – Diversified industry: Fortescue Ltd (FSUGY - Get Rating), Champion Iron Limited (CIAFF - Get Rating) and Amerigo Resources Ltd. (ARREF - Get Rating). To explore more Miners – Diversified stocks, click here.

What To Do Next?

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ORLA shares were unchanged in premarket trading Tuesday. Year-to-date, ORLA has gained 11.69%, versus a 7.90% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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