Nufarm Limited (ASX:NUF) On The Verge Of Breaking Even

We feel now is a pretty good time to analyse Nufarm Limited's (ASX:NUF) business as it appears the company may be on the cusp of a considerable accomplishment. Nufarm Limited, together with its subsidiaries, develops, manufactures, and sells crop protection solutions and seed technologies in Australia, New Zealand, Asia, Europe, and North America. The AU$1.8b market-cap company announced a latest loss of AU$548m on 30 September 2020 for its most recent financial year result. As path to profitability is the topic on Nufarm's 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 Nufarm

Consensus from 12 of the Australian Chemicals analysts is that Nufarm is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$33m in 2021. So, the company is predicted to breakeven approximately 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 40% 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 Nufarm's upcoming projects, however, take into account 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 issue worth mentioning. Nufarm currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Nufarm's case is 43%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Nufarm 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 Nufarm 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 Nufarm’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.

When trading Nufarm or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.