Yahoo Finance Loss-Making Europa Oil & Gas (Holdings) plc (LON:EOG) Expected To Breakeven
Europa Oil & Gas (Holdings) plc’s (LON:EOG): Europa Oil & Gas (Holdings) plc, together with its subsidiaries, engages in the exploration and development of oil and gas properties in the United Kingdom, Ireland, and France. The UK£13.3m market-cap posted a loss in its most recent financial year of -UK£491.0k and a latest trailing-twelve-month loss of -UK£681.0k leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which EOG will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for EOG, its year of breakeven and its implied growth rate.
Check out our latest analysis for Europa Oil & Gas (Holdings)
According to the industry analysts covering EOG, breakeven is near. They anticipate the company to incur a final loss in 2018, before generating positive profits of UK£200.0k in 2019. EOG is therefore projected to breakeven around a few months from now. How fast will EOG have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 110% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, EOG may become profitable much later than analysts predict.
Underlying developments driving EOG’s growth isn’t the focus of this broad overview, but, keep in mind that generally 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I’d like to point out is that EOG has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which usually has a high level of debt relative to its equity. This means that EOG has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on EOG, so if you are interested in understanding the company at a deeper level, take a look at EOG’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
Valuation: What is EOG 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 EOG 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 Europa Oil & Gas (Holdings)’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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
