In This Article:
We feel now is a pretty good time to analyse New World Resources Limited's (ASX:NWC) business as it appears the company may be on the cusp of a considerable accomplishment. New World Resources Limited engages in the exploration and redevelopment of mineral properties in North America. The AU$51m market-cap company posted a loss in its most recent financial year of AU$2.5m and a latest trailing-twelve-month loss of AU$3.1m leading to an even wider gap between loss and breakeven. 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for New World Resources
According to some industry analysts covering New World Resources, breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$52m in 2027. So, the company is predicted to breakeven approximately 3 years from now. 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 66%, 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 New World Resources' upcoming projects, but, keep 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that New World Resources has no debt on its balance sheet, which is quite unusual for a cash-burning 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:
There are key fundamentals of New World 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 World Resources, take a look at New World Resources' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
-
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.