Star Energy Group Plc (LON:STAR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Star Energy Group Plc operates as an oil and gas development, exploration, processing, and production company in the United Kingdom. The UK£11m market-cap company posted a loss in its most recent financial year of UK£12m and a latest trailing-twelve-month loss of UK£31m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Star Energy Group will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 2 industry analysts covering Star Energy Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of UK£15m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 96% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Star Energy Group's upcoming projects, but, take into account that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 8.8% 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.
There are too many aspects of Star Energy Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Star Energy Group's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Valuation: What is Star Energy Group 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 Star Energy Group 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 Star Energy Group’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.