Chariot Limited (LON:CHAR) Is Expected To Breakeven In The Near Future

With the business potentially at an important milestone, we thought we'd take a closer look at Chariot Limited's (LON:CHAR) future prospects. Chariot Limited, together with its subsidiaries, engages in the oil and gas exploration and appraisal activities. The UK£75m market-cap company announced a latest loss of US$16m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which Chariot 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.

View our latest analysis for Chariot

Chariot is bordering on breakeven, according to the 3 British Oil and Gas analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$9.0m in 2025. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 86%, 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 Chariot's growth isn’t the focus of this broad overview, though, bear in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Chariot 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:

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

1. Valuation: What is Chariot 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 Chariot 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 Chariot’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.