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Mosman Oil and Gas Limited (LON:MSMN) Could Be Less Than A Year Away From Profitability

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We feel now is a pretty good time to analyse Mosman Oil and Gas Limited's (LON:MSMN) business as it appears the company may be on the cusp of a considerable accomplishment. Mosman Oil and Gas Limited engages in the exploration, development, and production of oil and gas projects in Australia and the United States. On 30 June 2020, the UK£4.4m market-cap company posted a loss of AU$4.8m for its most recent financial year. The most pressing concern for investors is Mosman Oil and Gas' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Mosman Oil and Gas

Expectations from some of the British Oil and Gas analysts is that Mosman Oil and Gas is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of AU$233k in 2021. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 102% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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earnings-per-share-growth

We're not going to go through company-specific developments for Mosman Oil and Gas given that this is a high-level summary, though, bear in mind that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Mosman Oil and Gas has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which typically has high debt relative to its equity. This means that the company 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:

There are too many aspects of Mosman Oil and Gas to cover in one brief article, but the key fundamentals for the company can all be found in one place – Mosman Oil and Gas' company page on Simply Wall St. We've also put together a list of essential factors you should further research:

  1. Historical Track Record: What has Mosman Oil and Gas' 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 Mosman Oil and Gas' 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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