Yahoo Finance Vallourec S.A.'s (EPA:VK) Path To Profitability
Vallourec S.A.'s (EPA:VK): Vallourec S.A. through its subsidiaries, provides tubular solutions primarily for the energy markets and other industrial applications in Europe, North America, South America, Asia, the Middle East, and internationally. The €1.2b market-cap company’s loss lessens since it announced a -€502.5m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -€330.5m, as it approaches breakeven. As path to profitability is the topic on VK’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for VK, its year of breakeven and its implied growth rate.
Check out our latest analysis for Vallourec
VK is bordering on breakeven, according to the 12 Energy Services analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €27m in 2021. Therefore, VK is expected to breakeven roughly a few months from now. How fast will VK have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of VK’s upcoming projects, however, bear in mind 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 I wrap up, there’s one issue worth mentioning. VK currently has a debt-to-equity ratio of 152%. Typically, debt shouldn’t exceed 40% of your equity, which in VK’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of VK to cover in one brief article, but the key fundamentals for the company can all be found in one place – VK’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
Valuation: What is VK 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 VK 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 Vallourec’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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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