Leucrotta Exploration Inc. (CVE:LXE) About To Shift From Loss To Profit

Simply Wall St
November 11, 2021
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Leucrotta Exploration Inc.'s (CVE:LXE) future prospects. Leucrotta Exploration Inc., an oil and natural gas company, acquires, explores for, develops, and produces oil and natural gas reserves in northeastern British Columbia, Canada. The CA$245m market-cap company posted a loss in its most recent financial year of CA$111m and a latest trailing-twelve-month loss of CA$20m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Leucrotta Exploration will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Leucrotta Exploration

Leucrotta Exploration is bordering on breakeven, according to the 2 Canadian Oil and Gas analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$700k in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 182%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSXV:LXE Earnings Per Share Growth November 12th 2021

We're not going to go through company-specific developments for Leucrotta Exploration given that this is a high-level summary, though, keep in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Leucrotta Exploration 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. The company 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 Leucrotta Exploration to cover in one brief article, but the key fundamentals for the company can all be found in one place – Leucrotta Exploration's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

  1. Historical Track Record: What has Leucrotta Exploration'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 Leucrotta Exploration'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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.