Breakeven Is Near for Vista Oil & Gas, S.A.B. de C.V. (BMV:VISTAA)

With the business potentially at an important milestone, we thought we'd take a closer look at Vista Oil & Gas, S.A.B. de C.V.'s (BMV:VISTAA) future prospects. Vista Oil & Gas, S.A.B. de C.V., through its subsidiaries, engages in the exploration and production of oil and gas in Latin America. The Mex$5.3b market-cap company announced a latest loss of US$103m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Vista Oil & Gas. de's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Vista Oil & Gas. de

According to the 4 industry analysts covering Vista Oil & Gas. de, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$23m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 40% year-on-year, on average, which is extremely buoyant. 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 Vista Oil & Gas. de's upcoming projects, however, keep in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Vista Oil & Gas. de is its debt-to-equity ratio of 106%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Vista Oil & Gas. de, so if you are interested in understanding the company at a deeper level, take a look at Vista Oil & Gas. de's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is Vista Oil & Gas. de 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 Vista Oil & Gas. de 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 Vista Oil & Gas. de’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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