Serinus Energy plc's (LON:SENX) Profit Outlook

We feel now is a pretty good time to analyse Serinus Energy plc's (LON:SENX) business as it appears the company may be on the cusp of a considerable accomplishment. Serinus Energy plc, together with its subsidiaries, engages in the exploration and development of oil and gas properties. The UK£36m market-cap company announced a latest loss of US$9.3m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Serinus Energy 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.

View our latest analysis for Serinus Energy

According to the 2 industry analysts covering Serinus Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$763k in 2022. Therefore, the company is expected 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 138%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Serinus Energy's growth isn’t the focus of this broad overview, but, keep in mind that typically 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.

One thing we’d like to point out is that Serinus Energy 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. 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:

There are too many aspects of Serinus Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Serinus Energy's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

1. Valuation: What is Serinus Energy 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 Serinus Energy 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 Serinus Energy’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. 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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