Yahoo Finance Market Sentiment Around Loss-Making Comet Ridge Limited (ASX:COI)
With the business potentially at an important milestone, we thought we'd take a closer look at Comet Ridge Limited's (ASX:COI) future prospects. Comet Ridge Limited, together with its subsidiaries, engages in the oil and gas exploration, appraisal, and development activities in Australia. On 30 June 2023, the AU$178m market-cap company posted a loss of AU$6.6m for its most recent financial year. The most pressing concern for investors is Comet Ridge's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Comet Ridge
According to the 2 industry analysts covering Comet Ridge, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$1.8m in 2026. So, the company is predicted to breakeven approximately 3 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 62%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Comet Ridge's growth isn’t the focus of this broad overview, but, keep in mind 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.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 11% 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 Comet Ridge, so if you are interested in understanding the company at a deeper level, take a look at Comet Ridge's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:
Valuation: What is Comet Ridge 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 Comet Ridge 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 Comet Ridge’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.
