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When Can We Expect A Profit From New Century Resources Limited (ASX:NCZ)?

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·3 min read
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  • NWNNF

New Century Resources Limited (ASX:NCZ) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. New Century Resources Limited operates as a base metal development and production company in Australia and the United States. The AU$188m market-cap company posted a loss in its most recent financial year of AU$8.1m and a latest trailing-twelve-month loss of AU$8.0m shrinking the gap between loss and breakeven. The most pressing concern for investors is New Century Resources' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for New Century Resources

Expectations from some of the Australian Metals and Mining analysts is that New Century Resources is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$96m in 2022. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving New Century Resources' growth isn’t the focus of this broad overview, though, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. New Century Resources currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in New Century Resources' case is 81%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of New Century Resources which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at New Century Resources, take a look at New Century Resources' company page on Simply Wall St. We've also put together a list of key factors you should look at:

  1. Valuation: What is New Century Resources 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 New Century Resources 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 New Century Resources’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.

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.

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