Analysts Are Optimistic We'll See A Profit From Northern Minerals Limited (ASX:NTU)

We feel now is a pretty good time to analyse Northern Minerals Limited's (ASX:NTU) business as it appears the company may be on the cusp of a considerable accomplishment. Northern Minerals Limited operates in the mineral exploration industry in Australia. On 30 June 2024, the AU$112m market-cap company posted a loss of AU$32m for its most recent financial year. As path to profitability is the topic on Northern Minerals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Northern Minerals

Northern Minerals is bordering on breakeven, according to some Australian Metals and Mining analysts. They expect the company to post a final loss in 2024, before turning a profit of AU$1.2m in 2025. Therefore, the company is expected to breakeven roughly a year 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 38% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Northern Minerals given that this is a high-level summary, however, take into account 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 Northern Minerals is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

This article is not intended to be a comprehensive analysis on Northern Minerals, so if you are interested in understanding the company at a deeper level, take a look at Northern Minerals' company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is Northern Minerals 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 Northern Minerals is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Northern Minerals’s board and the CEO’s background.
3. 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.