New Murchison Gold (ASX:NMG) Profit Swing Questions Earnings Quality Narrative

New Murchison Gold (ASX:NMG) has just dropped its FY 2025 numbers, with second half revenue landing at about AU$17.9 million and basic EPS at roughly AU$0.00061. This sets up a clean snapshot of how the business is now translating activity into profit. The company has seen revenue move from effectively zero in the second half of FY 2024 to around AU$17.9 million in the latest half, while basic EPS has shifted from about AU$-0.00018 to AU$0.00061 over the same period. This frames a clear earnings turnaround that puts margins and the quality of those profits firmly in focus for investors.

See our full analysis for New Murchison Gold.

With the headline numbers on the table, the next step is to see how this swing into profit lines up with the dominant narratives around New Murchison Gold, and where the latest figures push back on what investors think they know.

Curious how numbers become stories that shape markets? Explore Community Narratives

LTM Net Income Swings To AU$4.8 Million

• Over the last twelve months, New Murchison Gold moved from a net loss of about AU$2.7 million in the prior comparable half year to net income of roughly AU$4.8 million, with the latest half alone contributing around AU$6.2 million of net profit on AU$17.9 million of revenue.
• What stands out for a bullish interpretation is that this profit step up aligns with reported five year earnings growth of 21.4 percent per year. However:
  • Trailing twelve month basic EPS sits at about AU$0.00054 per share, which is modest in absolute terms even after the turnaround.
  • The positive shift in net income follows earlier half year losses of about AU$2.6 million and AU$2.7 million, so the new profitability still sits against a recent history of red ink.

📊 Read the full New Murchison Gold Consensus Narrative.

High Non Cash Earnings Shape Profit Story

• The trailing twelve month net income of about AU$4.8 million is described as having a high proportion of non cash earnings, which means a significant share of that profit did not come from cash inflows even though it lifted basic EPS into positive territory.
• Critics highlight the risk side of the story by pointing to both the non cash mix and recent dilution, and the reported figures give them some clear talking points:
  • Net income moved from losses of roughly AU$2.7 million to a gain of AU$4.8 million over twelve months, so bears may argue that accounting items rather than underlying operations could be doing a lot of the heavy lifting.
  • Substantial shareholder dilution over the past year means that, even with the swing to profitability, each share only captured about AU$0.00054 of EPS across the trailing twelve months.

P E At 101.6x Sits Between Peers And Industry

• The stock trades on a price to earnings ratio of about 101.6 times, which is lower than the peer average of roughly 193.8 times but well above the broader Australian Metals and Mining industry average of around 22.3 times.
• From a bearish valuation angle, skeptics point to this middle ground multiple as a sign that the market already prices in a lot of the recent earnings improvement:
  • At a share price of about AU$0.045 and trailing twelve month EPS of roughly AU$0.00054, investors are paying a high multiple relative to the wider industry despite the company only just returning to profit.
  • When that P E is combined with the substantial dilution and the emphasis on non cash earnings, bears can reasonably question how much of the current valuation rests on accounting driven profits rather than repeatable operating performance.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on New Murchison Gold's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

Explore Alternatives

New Murchison Gold's recent profitability leans heavily on non cash earnings, shareholder dilution, and a steep valuation, leaving its underlying operating strength open to question.

If you want companies where price better reflects durable cash backed performance, use our these 903 undervalued stocks based on cash flows to quickly find opportunities with more compelling valuation support and upside potential.

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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