Solstad Farstad ASA’s (OB:SOFF): Solstad Farstad ASA operates offshore service and construction vessels for renewable energy at sea and offshore petroleum industry worldwide. The company’s loss has recently broadened since it announced a -øre313.77m loss in the full financial year, compared to the latest trailing-twelve-month loss of -øre678.45m, moving it further away from breakeven. The most pressing concern for investors is SOFF’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SOFF.Check out our latest analysis for Solstad Farstad
Expectation from Energy Services analysts is SOFF 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, SOFF is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which SOFF must grow year-on-year. It turns out an average annual growth rate of 34.73% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving SOFF’s growth isn’t the focus of this broad overview, however, bear in mind that typically an oil and gas 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.
Before I wrap up, there’s one issue worth mentioning. SOFF currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and SOFF has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on SOFF, so if you are interested in understanding the company at a deeper level, take a look at SOFF’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:
- Valuation: What is SOFF 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 SOFF 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 Solstad Farstad’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.