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Breakeven On The Horizon For Active Energy Group PLC (LON:AEG)

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We feel now is a pretty good time to analyse Active Energy Group PLC's (LON:AEG) business as it appears the company may be on the cusp of a considerable accomplishment. Active Energy Group PLC engages in the development and commercialization of biomass into renewable energy pellet products in the United Kingdom and internationally. The UK£20m market-cap company announced a latest loss of US$8.8m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Active Energy Group'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 Active Energy Group

Expectations from some of the British Oil and Gas analysts is that Active Energy Group is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$1.7m 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 153% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for Active Energy Group given that this is a high-level summary, though, take into account that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Active Energy Group currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of Active Energy Group 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 Active Energy Group, take a look at Active Energy Group's company page on Simply Wall St. We've also put together a list of key aspects you should look at:

  1. Historical Track Record: What has Active Energy Group'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 Active Energy Group'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.

This article by Simply Wall St is general in nature. 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.

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

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