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Cooper Energy Limited (ASX:COE) Has Found A Path To Profitability

Cooper Energy Limited (ASX:COE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Cooper Energy Limited, an upstream gas and oil exploration and production company, engages in securing, finding, developing, producing, and selling of hydrocarbons to south-east Australia. With the latest financial year loss of AU$11m and a trailing-twelve-month loss of AU$11m, the AU$421m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Cooper Energy will turn a profit, with the big question being “when will the company 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 Cooper Energy

According to the 10 industry analysts covering Cooper Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$6.1m in 2023. 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 42%, 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
earnings-per-share-growth

Underlying developments driving Cooper Energy's growth isn’t the focus of this broad overview, however, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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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:

There are key fundamentals of Cooper 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 Cooper Energy, take a look at Cooper Energy's company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

  1. Valuation: What is Cooper 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 Cooper 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 Cooper 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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