Chaparral Energy Inc’s (NYSE:CHAP) Shift From Loss To Profit
Chaparral Energy Inc’s (NYSE:CHAP): Chaparral Energy, Inc. engages in the acquisition, exploration, development, production, and operation of onshore oil and natural gas properties primarily in Oklahoma, the United States. The US$832.33m market-cap posted a loss in its most recent financial year of -US$118.90m and a latest trailing-twelve-month loss of -US$110.66m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which CHAP 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 CHAP, its year of breakeven and its implied growth rate.
View our latest analysis for Chaparral Energy
According to the industry analysts covering CHAP, breakeven is near. They expect the company to post a final loss in 2018, before turning a profit of US$25.64m in 2019. So, CHAP is predicted to breakeven approximately a couple of months from now! What rate will CHAP 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 104.95%, 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, I won’t go into details of CHAP’s upcoming projects, however, bear in mind that by and large oil and gas 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.
One thing I’d like to point out is that CHAP has managed its capital prudently, with debt making up 26.71% of equity. This means that CHAP has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of CHAP to cover in one brief article, but the key fundamentals for the company can all be found in one place – CHAP’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:
Historical Track Record: What has CHAP’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 Chaparral Energy’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.
