Bannerman Energy Ltd's (ASX:BMN) Path To Profitability

Bannerman Energy Ltd (ASX:BMN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Bannerman Energy Ltd engages in the exploration and development of uranium properties in Africa. The AU$538m market-cap company announced a latest loss of AU$9.5m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Bannerman 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 Bannerman Energy

According to the 2 industry analysts covering Bannerman Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$34m in 2027. Therefore, the company is expected to breakeven roughly 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? 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! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Bannerman Energy given that this is a high-level summary, but, keep in mind that by and large energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Bannerman Energy 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. 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 Bannerman Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Bannerman Energy's company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Valuation: What is Bannerman Energy 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 Bannerman Energy is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Bannerman 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.

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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.