Breakeven On The Horizon For Provaris Energy Ltd (ASX:PV1)

Provaris Energy Ltd (ASX:PV1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Provaris Energy Ltd engages in the development of hydrogen production and export projects in Australia and internationally. The AU$8.3m market-cap company posted a loss in its most recent financial year of AU$6.1m and a latest trailing-twelve-month loss of AU$3.7m shrinking the gap between loss and breakeven. The most pressing concern for investors is Provaris Energy's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Expectations from some of the Australian Oil and Gas analysts is that Provaris Energy is on the verge of breakeven. They expect the company to post a final loss in 2026, before turning a profit of AU$8.0m in 2027. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 68%, which signals high confidence from analysts. 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 Provaris Energy given that this is a high-level summary, though, keep in mind that typically 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.

See our latest analysis for Provaris Energy

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 19% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Provaris 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 Provaris 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.