Yahoo Finance When Will ConocoPhillips (NYSE:COP) Turn A Profit?
ConocoPhillips’s (NYSE:COP): ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids worldwide. With the latest financial year loss of -US$855.00M and a trailing-twelve month of -US$553.00M, the US$81.24B market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is COP’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for COP.
Check out our latest analysis for ConocoPhillips
Expectation from analysts is COP is on the verge of breakeven. They expect the company to post a final loss in 2017, before turning a profit of US$4.58B in 2018. COP is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which COP must grow year-on-year. It turns out an average annual growth rate of 11.92% is expected, which seems realistic. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving COP’s growth isn’t the focus of this broad overview, but, keep in mind that by and large an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means a double-digit growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one issue worth mentioning. COP currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in COP’s case is 55.49%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on COP, so if you are interested in understanding the company at a deeper level, take a look at COP’s company page on Simply Wall St. I’ve also put together a list of important factors you should further examine:
Valuation: What is COP 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 COP 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 ConocoPhillips’s board and the CEO’s back ground.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
