Analysts Expect Breakeven For New World Resources Limited (ASX:NWC) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at New World Resources Limited's (ASX:NWC) future prospects. New World Resources Limited engages in the exploration and redevelopment of mineral properties in North America. With the latest financial year loss of AU$2.5m and a trailing-twelve-month loss of AU$3.1m, the AU$82m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is New World Resources' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving New World Resources' growth isn’t the focus of this broad overview, but, bear 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 usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

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 put together a list of essential factors you should further examine:

1. 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.
2. 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.
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.

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