Breakeven On The Horizon For Africa Oil Corp (TSE:AOI)

Africa Oil Corp’s (TSE:AOI): Africa Oil Corp., together with its subsidiaries, operates as an oil and gas exploration and development company in Kenya and Ethiopia. The CA$550.56m market-cap posted a loss in its most recent financial year of -CA$4.53m and a latest trailing-twelve-month loss of -CA$4.22m shrinking the gap between loss and breakeven. As path to profitability is the topic on AOI’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for AOI’s growth and when analysts expect the company to become profitable.

View out our latest analysis for Africa Oil

AOI is bordering on breakeven, according to Oil and Gas analysts. They expect the company to post a final loss in -1, before turning a profit of CA$0 in . AOI is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which AOI must grow year-on-year. It turns out an average annual growth rate of -5.23% is expected,

TSX:AOI Past Future Earnings June 27th 18
TSX:AOI Past Future Earnings June 27th 18

I’m not going to go through company-specific developments for AOI given that this is a high-level summary, however, take into account that by and large oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.

Before I wrap up, there’s one aspect worth mentioning. AOI currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which typically has high debt relative to its equity. AOI 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 AOI to cover in one brief article, but the key fundamentals for the company can all be found in one place – AOI’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has AOI’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 Africa Oil’s board and the CEO’s back ground.
  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.