Newfield Resources Limited's (ASX:NWF) Profit Outlook

Newfield Resources Limited (ASX:NWF) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Newfield Resources Limited engages in the mine development, stope mining, and mineral exploration activities primarily in Australia and Africa. The company’s loss has recently broadened since it announced a AU$10m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$12m, moving it further away from breakeven. As path to profitability is the topic on Newfield Resources' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Newfield Resources

Expectations from some of the Australian Metals and Mining analysts is that Newfield Resources is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of AU$630k in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, 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 Newfield Resources 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 1.7% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Newfield Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Newfield Resources' company page on Simply Wall St. We've also put together a list of key factors you should further examine:

1. Valuation: What is Newfield Resources 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 Newfield Resources 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 Newfield Resources’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.