With the business potentially at an important milestone, we thought we'd take a closer look at Lamprell plc's (LON:LAM) future prospects. Lamprell plc, together with its subsidiaries, provides fabrication, engineering, installation, and contracting services to the offshore and onshore oil and gas, and renewable energy industries in the United Arab Emirates and Saudi Arabia. The UK£148m market-cap company’s loss lessened since it announced a US$184m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$159m, as it approaches breakeven. As path to profitability is the topic on Lamprell's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Lamprell is bordering on breakeven, according to the 3 British Energy Services analysts. They expect the company to post a final loss in 2021, before turning a profit of US$18m in 2022. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 108% 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.
Given this is a high-level overview, we won’t go into details of Lamprell's upcoming projects, but, take into account that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. 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. Lamprell 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. 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.
There are too many aspects of Lamprell to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lamprell's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:
- Valuation: What is Lamprell 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 Lamprell is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lamprell’s board and the CEO’s background.
- 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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