Whiting Petroleum Corporation’s (NYSE:WLL) Profit Outlook

Whiting Petroleum Corporation’s (NYSE:WLL): Whiting Petroleum Corporation engages in the acquisition, exploration, development, and production of crude oil, natural gas liquids, and natural gas primarily in the Rocky Mountains region of the United States. With the latest financial year loss of -US$1.24B and a trailing-twelve month of -US$1.14B, the US$4.80B market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which WLL will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for WLL, its year of breakeven and its implied growth rate.

View our latest analysis for Whiting Petroleum

Expectation from analysts is WLL is on the verge of breakeven. They expect the company to post a final loss in 2017, before turning a profit of US$183.65M in 2018. So, WLL is predicted to breakeven approximately a couple of months from now! How fast will WLL have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 23.07% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, WLL may become profitable much later than analysts predict.

NYSE:WLL Past Future Earnings Jun 1st 18
NYSE:WLL Past Future Earnings Jun 1st 18

Underlying developments driving WLL’s growth isn’t the focus of this broad overview, however, keep in mind that generally 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. WLL currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in WLL’s case is 72.71%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is WLL 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 WLL 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 Whiting Petroleum’s board and the CEO’s back ground.
  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.