Petroleum Geo-Services ASA’s (OB:PGS): Petroleum Geo-Services ASA, a marine geophysical company, provides a range of seismic and reservoir services worldwide. With the latest financial year loss of -øre523.40m and a trailing-twelve month of -øre456.90m, the øre12.48b market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which PGS will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PGS.See our latest analysis for Petroleum Geo-Services
According to the industry analysts covering PGS, breakeven is near. They anticipate the company to incur a final loss in 2018, before generating positive profits of øre26.67m in 2019. Therefore, PGS is expected to breakeven roughly a couple of months from now! How fast will PGS have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 78.52% 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.
I’m not going to go through company-specific developments for PGS given that this is a high-level summary, though, keep in mind that typically oil and gas 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 I wrap up, there’s one issue worth mentioning. PGS currently has a debt-to-equity ratio of 158.58%. Typically, debt shouldn’t exceed 40% of your equity, which in PGS’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on PGS, so if you are interested in understanding the company at a deeper level, take a look at PGS’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further research:
- Valuation: What is PGS 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 PGS 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 Petroleum Geo-Services’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.