Analysts Expect Breakeven For ION Geophysical Corporation (NYSE:IO)
ION Geophysical Corporation's (NYSE:IO): ION Geophysical Corporation, together with its subsidiaries, provides a suite of services and products for seismic data acquisition and processing the United States and internationally. The US$110m market-cap company’s loss lessens since it announced a -US$71.2m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$56.9m, as it approaches breakeven. Many investors are wondering the rate at which IO will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for IO, its year of breakeven and its implied growth rate.
Check out our latest analysis for ION Geophysical
According to the 3 industry analysts covering IO, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$15m in 2021. So, IO is predicted to breakeven approximately 2 years from now. How fast will IO have to grow each year in order to reach the breakeven point 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, IO may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of IO’s upcoming projects, however, keep in mind that generally oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. IO currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
Next Steps:
There are key fundamentals of IO 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 IO, take a look at IO’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:
Valuation: What is IO 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 IO 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 ION Geophysical’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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
