Obsidian Energy Ltd’s (TSE:OBE): Obsidian Energy Ltd. explores for, develops, and produces oil and natural gas in western Canada. The company’s loss has recently broadened since it announced a -CA$84.00m loss in the full financial year, compared to the latest trailing-twelve-month loss of -CA$176.00m, moving it further away from breakeven. As path to profitability is the topic on OBE’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for OBE, its year of breakeven and its implied growth rate.View out our latest analysis for Obsidian Energy
Expectation from Oil and Gas analysts is OBE is on the verge of breakeven. They anticipate the company to incur a final loss in -1, before generating positive profits of CA$0 in . Therefore, OBE is expected to breakeven roughly a few months from now. What rate will OBE 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 43.81%, which is rather optimistic! If this rate turns out to be too aggressive, OBE may become profitable much later than analysts predict.
Underlying developments driving OBE’s growth isn’t the focus of this broad overview, but, bear in mind that typically 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.
Before I wrap up, there’s one aspect worth mentioning. OBE has managed its capital prudently, with debt making up 17.46% of equity. This means that OBE has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of OBE to cover in one brief article, but the key fundamentals for the company can all be found in one place – OBE’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:
- Valuation: What is OBE 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 OBE 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 Obsidian Energy’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.