Nine Energy Service, Inc. (NYSE:NINE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Nine Energy Service, Inc. operates as an onshore completion services provider that targets unconventional oil and gas resource development across North American basins and internationally. On 31 December 2021, the US$102m market-cap company posted a loss of US$65m for its most recent financial year. The most pressing concern for investors is Nine Energy Service's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to some industry analysts covering Nine Energy Service, breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$2.4m in 2023. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 100% 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.
We're not going to go through company-specific developments for Nine Energy Service given that this is a high-level summary, but, bear in mind that generally 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 Nine Energy Service is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
There are too many aspects of Nine Energy Service to cover in one brief article, but the key fundamentals for the company can all be found in one place – Nine Energy Service's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:
- Valuation: What is Nine Energy Service 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 Nine Energy Service 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 Nine Energy Service’s board and the CEO’s background.
- 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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.