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Namoi Cotton Limited (ASX:NAM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Namoi Cotton Limited, together with its subsidiaries, engages in the ginning and marketing of cotton in Australia and Asia. The AU$77m market-cap company’s loss lessened since it announced a AU$14m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$5.4m, as it approaches breakeven. As path to profitability is the topic on Namoi Cotton's 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.
Expectations from some of the Australian Commercial Services analysts is that Namoi Cotton is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$14m in 2023. The company is therefore projected to breakeven around 2 years 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 54% year-on-year, on average, which is extremely buoyant. 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 Namoi Cotton's upcoming projects, 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 judiciously, with debt making up 36% 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.
There are key fundamentals of Namoi Cotton 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 Namoi Cotton, take a look at Namoi Cotton's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:
Valuation: What is Namoi Cotton 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 Namoi Cotton is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Namoi Cotton’s board and the CEO’s background.
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.
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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