Analysts Are Optimistic We'll See A Profit From Noble Corporation (NYSE:NE)

By
Simply Wall St
Published
September 09, 2021
NYSE:NE
Source: Shutterstock

Noble Corporation (NYSE:NE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Noble Corporation, together with its subsidiaries, operates as an offshore drilling contractor for the oil and gas industry worldwide. The US$1.4b market-cap company’s loss lessened since it announced a US$4.0b loss in the full financial year, compared to the latest trailing-twelve-month loss of US$2.6b, as it approaches breakeven. The most pressing concern for investors is Noble's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Noble

According to the 3 industry analysts covering Noble, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$229m in 2021. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 85%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:NE Earnings Per Share Growth September 10th 2021

We're not going to go through company-specific developments for Noble given that this is a high-level summary, though, bear in mind that typically an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 29% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Noble, so if you are interested in understanding the company at a deeper level, take a look at Noble's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:

  1. Valuation: What is Noble 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 Noble 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 Noble’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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