Aura Energy Limited (ASX:AEE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aura Energy Limited, together with its subsidiaries, engages in the evaluation, development, and exploration of mineral properties in Mauritania and Sweden. The AU$210m market-cap company announced a latest loss of AU$6.5m on 30 June 2023 for its most recent financial year result. Many investors are wondering about the rate at which Aura Energy 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.
Aura Energy is bordering on breakeven, according to some Australian Oil and Gas analysts. They expect the company to post a final loss in 2025, before turning a profit of AU$9.2m in 2026. The company is therefore projected to breakeven around 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Aura Energy's growth isn’t the focus of this broad overview, though, keep in mind that typically 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.
Before we wrap up, there’s one aspect worth mentioning. Aura Energy currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of Aura Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Aura Energy's company page on Simply Wall St. We've also put together a list of key factors you should further research:
Historical Track Record: What has Aura Energy'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 Aura Energy'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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.