Loss-Making Novonix Limited (ASX:NVX) Expected To Breakeven In The Medium-Term
Novonix Limited (ASX:NVX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Novonix Limited develops and supplies battery materials, equipment, and services to the lithium-ion battery market in North America. The AU$503m market-cap company posted a loss in its most recent financial year of US$56m and a latest trailing-twelve-month loss of US$53m shrinking the gap between loss and breakeven. As path to profitability is the topic on Novonix's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Novonix
Novonix is bordering on breakeven, according to some Australian Electronic analysts. They expect the company to post a final loss in 2023, before turning a profit of US$41m in 2024. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 36%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Novonix given that this is a high-level summary, though, bear in mind that typically 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 32% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Novonix 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 Novonix, take a look at Novonix's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Historical Track Record: What has Novonix's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Novonix'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.
