Renascor Resources Limited’s (ASX:RNU): Renascor Resources Limited acquires, explores for, and develops mineral deposits in Australia. The company’s loss has recently broadened since it announced a -AU$1.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of -AU$3.5m, moving it further away from breakeven. The most pressing concern for investors is RNU’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for RNU.
RNU is bordering on breakeven, according to Oil and Gas analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$300.0k in 2020. So, RNU is predicted to breakeven approximately a couple of months from now! What rate will RNU have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 65.0%, which is extremely buoyant. 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 RNU given that this is a high-level summary, however, keep in mind that by and large 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.
One thing I’d like to point out is that RNU has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which typically has high debt relative to its equity. This means that RNU 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.
There are too many aspects of RNU to cover in one brief article, but the key fundamentals for the company can all be found in one place – RNU’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:
- Historical Track Record: What has RNU’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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Renascor Resources’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.