Electromagnetic Geoservices ASA’s (OB:EMGS): Electromagnetic Geoservices ASA, together with its subsidiaries, provides electromagnetic (EM) surveying services to the offshore oil and gas exploration industry worldwide. With the latest financial year loss of -øre22.28m and a trailing-twelve month of -øre24.12m, the øre442.68m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is EMGS’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for EMGS, its year of breakeven and its implied growth rate.See our latest analysis for Electromagnetic Geoservices
Expectation from Energy Services analysts is EMGS is on the verge of breakeven. They anticipate the company to incur a final loss in -1, before generating positive profits of øre0 in . Therefore, EMGS is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which EMGS must grow year-on-year. It turns out an average annual growth rate of 38.44% is expected, 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, I won’t go into details of EMGS’s upcoming projects, but, bear in mind that generally oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. EMGS currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in EMGS’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of EMGS which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at EMGS, take a look at EMGS’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
- Historical Track Record: What has EMGS’s 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Electromagnetic Geoservices’s board and the CEO’s back ground.
- 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.