Breakeven Is Near for Afentra plc (LON:AET)

Afentra plc (LON:AET) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Afentra PLC, together with its subsidiaries, operates as an upstream oil and gas company primarily in Africa. The UK£63m market-cap company announced a latest loss of US$9.1m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Afentra will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Afentra

Afentra is bordering on breakeven, according to the 2 British Oil and Gas analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$12m in 2023. 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 32%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Afentra's growth isn’t the focus of this broad overview, though, take into account 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. Afentra currently has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which usually has a high level of 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:

This article is not intended to be a comprehensive analysis on Afentra, so if you are interested in understanding the company at a deeper level, take a look at Afentra's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

1. Valuation: What is Afentra 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 Afentra 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 Afentra’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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.