Yahoo Finance Paringa Resources Limited’s (ASX:PNL) Path To Profitability
Paringa Resources Limited’s (ASX:PNL): Paringa Resources Limited, together with its subsidiaries, engages in the exploration and development of resource projects. The AU$90.9m market-cap posted a loss in its most recent financial year of -US$6.0m and a latest trailing-twelve-month loss of -US$7.5m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on PNL’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for PNL’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for Paringa Resources
PNL is bordering on breakeven, according to Oil and Gas analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$15.6m in 2020. PNL is therefore projected to breakeven around a few months from now. What rate will PNL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 52.8%, which is rather optimistic! If this rate turns out to be too aggressive, PNL may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of PNL’s upcoming projects, though, keep in mind that typically an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I’d like to point out is that PNL has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which usually has a high level of debt relative to its equity. PNL currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of PNL which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at PNL, take a look at PNL’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:
Historical Track Record: What has PNL’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Paringa Resources’s board and the CEO’s back ground.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
