Yahoo Finance Challenger Energy Group PLC (LON:CEG) About To Shift From Loss To Profit
Challenger Energy Group PLC (LON:CEG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Challenger Energy Group PLC engages in the oil and gas exploration activities in the Caribbean and South America. The company’s loss has recently broadened since it announced a US$4.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$5.3m, moving it further away from breakeven. As path to profitability is the topic on Challenger Energy Group's investors mind, we've decided to gauge market sentiment. 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 Challenger Energy Group
According to some industry analysts covering Challenger Energy Group, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$800k in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 86%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Challenger Energy Group given that this is a high-level summary, however, keep in mind that by and large 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.
One thing we’d like to point out is that Challenger Energy Group has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of Challenger 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 Challenger Energy Group, take a look at Challenger Energy Group's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:
Valuation: What is Challenger Energy Group 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 Challenger Energy Group 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 Challenger Energy Group’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
