When Will Lamprell plc (LON:LAM) Breakeven?

Lamprell plc (LON:LAM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 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. With the latest financial year loss of US$184m and a trailing-twelve-month loss of US$159m, the UK£270m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Lamprell 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 Lamprell

Consensus from 3 of the British Energy Services analysts is that Lamprell is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$18m in 2022. So, the company is predicted to breakeven just over a year from today. 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 107% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Lamprell'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 Lamprell has no debt on its balance sheet, which is rare for a loss-making 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:

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 essential factors you should look at:

1. 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.
2. 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.
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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