Sanchez Midstream Partners LP’s (NYSEMKT:SNMP): Sanchez Midstream Partners LP engages in the acquisition, development, ownership, and operation of midstream and other energy-related assets in the United States. The US$178.06m market-cap posted a loss in its most recent financial year of -US$40.71m and a latest trailing-twelve-month loss of -US$30.86m shrinking the gap between loss and breakeven. The most pressing concern for investors is SNMP’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SNMP.Check out our latest analysis for Sanchez Midstream Partners
According to the industry analysts covering SNMP, breakeven is near. They expect the company to post a final loss in 2018, before turning a profit of US$7.40m in 2019. Therefore, SNMP is expected to breakeven roughly a couple of months from now! How fast will SNMP 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 103.26% 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.
I’m not going to go through company-specific developments for SNMP given that this is a high-level summary, though, bear 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 that a high 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. SNMP currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SNMP’s case is 60.26%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of SNMP to cover in one brief article, but the key fundamentals for the company can all be found in one place – SNMP’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further research:
- Valuation: What is SNMP 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 SNMP 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 Sanchez Midstream Partners’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.