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With the business potentially at an important milestone, we thought we'd take a closer look at Civeo Corporation's (NYSE:CVEO) future prospects. Civeo Corporation provides hospitality services to the natural resource industry in Canada, Australia, and the United States. On 31 December 2021, the US$330m market-cap company posted a loss of US$575k for its most recent financial year. The most pressing concern for investors is Civeo's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Civeo is bordering on breakeven, according to the 2 American Commercial Services analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$4.6m in 2022. 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 107% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Civeo given that this is a high-level summary, however, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Civeo currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Civeo's case is 48%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of Civeo 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 Civeo, take a look at Civeo's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
Valuation: What is Civeo 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 Civeo 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 Civeo’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.