When Can We Expect A Profit From Jervois Global Limited (ASX:JRV)?

With the business potentially at an important milestone, we thought we'd take a closer look at Jervois Global Limited's (ASX:JRV) future prospects. Jervois Global Limited explores for and evaluates mineral properties in the United States, Brazil, Australia, and Uganda. The AU$835m market-cap company posted a loss in its most recent financial year of AU$48m and a latest trailing-twelve-month loss of AU$64m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Jervois Global's path to profitability – when will it breakeven? 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 Jervois Global

Consensus from 2 of the Australian Metals and Mining analysts is that Jervois Global is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$15m in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 62% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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We're not going to go through company-specific developments for Jervois Global given that this is a high-level summary, but, bear in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 32% 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 Jervois Global 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 Jervois Global, take a look at Jervois Global's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

1. Valuation: What is Jervois Global 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 Jervois Global 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 Jervois Global’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.