With the business potentially at an important milestone, we thought we'd take a closer look at Crescent Point Energy Corp.'s (TSE:CPG) future prospects. Crescent Point Energy Corp. explores, develops, and produces light and medium crude oil and natural gas reserves in Western Canada and the United States. The CA$2.9b market-cap company announced a latest loss of CA$2.5b on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Crescent Point Energy's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 2 of the Canadian Oil and Gas analysts is that Crescent Point Energy is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$263m in 2021. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 84% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Crescent Point Energy's upcoming projects, however, take into account that by and large energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. 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 Crescent Point Energy is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Crescent Point Energy's case is 80%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of Crescent Point Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Crescent Point Energy's company page on Simply Wall St. We've also put together a list of key factors you should look at:
- Valuation: What is Crescent Point 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 Crescent Point Energy is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Crescent Point Energy’s board and the CEO’s background.
- 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. 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.
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