New World Resources Limited (ASX:NWC): Is Breakeven Near?
New World Resources Limited (ASX:NWC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. New World Resources Limited engages in the exploration and development of mineral properties in North America. On 30 June 2022, the AU$120m market-cap company posted a loss of AU$15m for its most recent financial year. Many investors are wondering about the rate at which New World Resources will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for New World Resources
Expectations from some of the Australian Metals and Mining analysts is that New World Resources is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$2.9m in 2025. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 91% is expected, which is extremely buoyant. 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 New World Resources' upcoming projects, though, keep in mind that typically 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one aspect worth mentioning. New World Resources currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on New World Resources, so if you are interested in understanding the company at a deeper level, take a look at New World Resources' company page on Simply Wall St. We've also put together a list of important aspects you should further research:
Historical Track Record: What has New World Resources' 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 New World Resources' 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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