Yahoo Finance We Might See A Profit From Pharos Energy plc (LON:PHAR) Soon
Pharos Energy plc (LON:PHAR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Pharos Energy plc engages in the exploration, development, and production of oil and gas properties. The UK£114m market-cap company announced a latest loss of US$4.7m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on Pharos Energy's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Pharos Energy
Pharos Energy is bordering on breakeven, according to the 2 British Oil and Gas analysts. They expect the company to post a final loss in 2021, before turning a profit of US$33m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 77% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Pharos Energy's upcoming projects, however, take into account that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 26% 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 Pharos Energy, so if you are interested in understanding the company at a deeper level, take a look at Pharos Energy's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:
Valuation: What is Pharos 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 Pharos Energy 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 Pharos Energy’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.
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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.
