When Will Reabold Resources Plc (LON:RBD) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Reabold Resources Plc's (LON:RBD) future prospects. Reabold Resources Plc invests in upstream oil and gas projects. The UK£40m market-cap company’s loss lessened since it announced a UK£4.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£3.0m, as it approaches breakeven. Many investors are wondering about the rate at which Reabold Resources will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Reabold Resources

Reabold Resources is bordering on breakeven, according to the 2 British Oil and Gas analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£2.1m in 2022. Therefore, the company is expected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 114% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Reabold Resources given that this is a high-level summary, though, take into account that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Reabold Resources has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Reabold Resources' 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 Reabold Resources' 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. 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.
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