Anglo African Oil & Gas Plc’s (LON:AAOG) Shift From Loss To Profit

Anglo African Oil & Gas Plc’s (LON:AAOG): Anglo African Oil & Gas Plc, an oil and gas company, engages in the extraction and exploration of natural resources in the United Kingdom and the Republic of the Congo. The UK£14.83m market-cap company announced a latest loss of -UK£3.14m on 31 December 2017 for its most recent financial year result. Many investors are wondering the rate at which AAOG will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for AAOG, its year of breakeven and its implied growth rate.

Check out our latest analysis for Anglo African Oil & Gas

AAOG is bordering on breakeven, according to Oil and Gas analysts. They expect the company to post a final loss in 2018, before turning a profit of UK£6.20m in 2019. Therefore, AAOG is expected to breakeven roughly a couple of months from now! How fast will AAOG have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 90.64% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

AIM:AAOG Past Future Earnings July 2nd 18
AIM:AAOG Past Future Earnings July 2nd 18

Given this is a high-level overview, I won’t go into details of AAOG’s upcoming projects, however, keep in mind that generally 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. AAOG has managed its capital judiciously, with debt making up 0.15% of equity. This means that AAOG has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of AAOG which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at AAOG, take a look at AAOG’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:

  1. Valuation: What is AAOG 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 AAOG 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 Anglo African Oil & Gas’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.