Breakeven Is Near for New Fortress Energy Inc. (NASDAQ:NFE)

We feel now is a pretty good time to analyse New Fortress Energy Inc.'s (NASDAQ:NFE) business as it appears the company may be on the cusp of a considerable accomplishment. New Fortress Energy Inc. operates as an integrated energy infrastructure company worldwide. With the latest financial year loss of US$34m and a trailing-twelve-month loss of US$190m, the US$9.3b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is New Fortress Energy's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for New Fortress Energy

According to the 8 industry analysts covering New Fortress Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$176m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 48% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for New Fortress Energy given that this is a high-level summary, however, keep in mind that typically energy 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.

One thing we would like to bring into light with New Fortress Energy is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of New Fortress Energy which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at New Fortress Energy, take a look at New Fortress Energy's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

1. Valuation: What is New Fortress Energy 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 New Fortress Energy 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 New Fortress Energy’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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