Yahoo Finance When Will NexGen Energy Ltd. (TSE:NXE) Breakeven?
We feel now is a pretty good time to analyse NexGen Energy Ltd.'s (TSE:NXE) business as it appears the company may be on the cusp of a considerable accomplishment. NexGen Energy Ltd., an exploration and development stage company, engages in the acquisition, exploration, and evaluation and development of uranium properties in Canada. On 31 December 2022, the CA$2.7b market-cap company posted a loss of CA$57m for its most recent financial year. Many investors are wondering about the rate at which NexGen Energy will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for NexGen Energy
Consensus from 5 of the Canadian Oil and Gas analysts is that NexGen Energy is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of CA$2.0m in 2024. Therefore, the company is expected 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 115% 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.
Underlying developments driving NexGen Energy's growth isn’t the focus of this broad overview, but, bear in mind that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 18% 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 key fundamentals of NexGen Energy 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 NexGen Energy, take a look at NexGen Energy's company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
Valuation: What is NexGen Energy 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 NexGen Energy 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 NexGen Energy’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.
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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