When Will Trillion Energy International Inc. (CSE:TCF) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Trillion Energy International Inc.'s (CSE:TCF) future prospects. Trillion Energy International Inc. operates as an oil and gas exploration and production company in Turkey and Bulgaria. With the latest financial year loss of US$1.1m and a trailing-twelve-month loss of US$2.1m, the CA$20m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Trillion Energy International's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Trillion Energy International

Expectations from some of the Canadian Oil and Gas analysts is that Trillion Energy International is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$19m in 2025. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 154% is expected, which is rather optimistic! 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 Trillion Energy International given that this is a high-level summary, however, take into account 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Trillion Energy International is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Trillion Energy International's case is 63%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Trillion Energy International, so if you are interested in understanding the company at a deeper level, take a look at Trillion Energy International's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:

1. Valuation: What is Trillion Energy International 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 Trillion Energy International 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 Trillion Energy International’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.

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