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When Can We Expect A Profit From Novonix Limited (ASX:NVX)?

We feel now is a pretty good time to analyse Novonix Limited's (ASX:NVX) business as it appears the company may be on the cusp of a considerable accomplishment. Novonix Limited develops and supplies battery materials, equipment, and services to the lithium-ion battery market in North America. The AU$937m market-cap company announced a latest loss of AU$71m on 30 June 2022 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.

View our latest analysis for Novonix

According to some industry analysts covering Novonix, breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$66m in 2024. So, the company is predicted 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 43% 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.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Novonix given that this is a high-level summary, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 15% 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 compiled a list of pertinent factors you should further research:

  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.

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

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.

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