When Will Aura Energy Limited (ASX:AEE) Turn A Profit?

Aura Energy Limited (ASX:AEE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aura Energy Limited, together with its subsidiaries, engages in the evaluation, development, and exploration of mineral properties in Mauritania and Sweden. The AU$173m market-cap company announced a latest loss of AU$6.5m on 30 June 2023 for its most recent financial year result. Many investors are wondering about the rate at which Aura Energy will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Aura Energy

Expectations from some of the Australian Oil and Gas analysts is that Aura Energy is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$9.2m in 2026. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% 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.

We're not going to go through company-specific developments for Aura Energy given that this is a high-level summary, though, keep in mind that by and large an energy 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.

Before we wrap up, there’s one aspect worth mentioning. Aura Energy currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Historical Track Record: What has Aura Energy's 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 Aura Energy's 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.