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We feel now is a pretty good time to analyse Jervois Global Limited's (ASX:JRV) business as it appears the company may be on the cusp of a considerable accomplishment. Jervois Global Limited explores for and evaluates mineral properties in the United States, Brazil, Finland, Australia, and internationally. The AU$1.2b market-cap company posted a loss in its most recent financial year of AU$29m and a latest trailing-twelve-month loss of AU$21m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Jervois Global will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Jervois Global is bordering on breakeven, according to the 2 Australian Metals and Mining analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$27m in 2022. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 60%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Jervois Global's upcoming projects, however, bear in mind that by and large 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.
One thing we would like to bring into light with Jervois Global is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Jervois Global's case is 57%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Jervois Global, so if you are interested in understanding the company at a deeper level, take a look at Jervois Global's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:
Valuation: What is Jervois Global 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 Jervois Global is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Jervois Global’s board and the CEO’s background.
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.
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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.