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We feel now is a pretty good time to analyse Namoi Cotton Limited's (ASX:NAM) business as it appears the company may be on the cusp of a considerable accomplishment. Namoi Cotton Limited, together with its subsidiaries, engages in the ginning and supply chain and marketing of cotton in Australia and Asia. The AU$86m market-cap company announced a latest loss of AU$4.4m on 28 February 2022 for its most recent financial year result. As path to profitability is the topic on Namoi Cotton'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.
Namoi Cotton is bordering on breakeven, according to some Australian Commercial Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$11m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 43% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Namoi Cotton's upcoming projects, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 40% 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.
There are too many aspects of Namoi Cotton to cover in one brief article, but the key fundamentals for the company can all be found in one place – Namoi Cotton's company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is Namoi Cotton 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 Namoi Cotton 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 Namoi Cotton’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.