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IGas Energy plc (LON:IGAS) On The Verge Of Breaking Even

With the business potentially at an important milestone, we thought we'd take a closer look at IGas Energy plc's (LON:IGAS) future prospects. IGas Energy plc operates as an oil and gas exploration and production company Britain. The UK£20m market-cap company announced a latest loss of UK£42m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which IGas Energy will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for IGas Energy

IGas Energy is bordering on breakeven, according to some British Oil and Gas analysts. They expect the company to post a final loss in 2020, before turning a profit of UK£5.7m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 97% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of IGas Energy's upcoming projects, but, take into account that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

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One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 19% 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 IGas Energy, so if you are interested in understanding the company at a deeper level, take a look at IGas Energy's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

  1. Valuation: What is IGas 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 IGas 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 IGas 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.

This article by Simply Wall St is general in nature. 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.

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