Analysts Expect Breakeven For Novonix Limited (ASX:NVX) Before Long

By
Simply Wall St
Published
January 02, 2022
ASX:NVX
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Novonix Limited's (ASX:NVX) future prospects. Novonix Limited develops and supplies battery materials, equipment, and services to the lithium-ion battery market in North America. The AU$4.4b market-cap company announced a latest loss of AU$18m on 30 June 2021 for its most recent financial year result. The most pressing concern for investors is Novonix's 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.

See our latest analysis for Novonix

According to the 2 industry analysts covering Novonix, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$13m in 2023. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:NVX Earnings Per Share Growth January 2nd 2022

We're not going to go through company-specific developments for Novonix given that this is a high-level summary, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 3.4% 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:

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

  1. Historical Track Record: What has Novonix's 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 Novonix'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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