EnLink Midstream, LLC (NYSE:ENLC) On The Verge Of Breaking Even
With the business potentially at an important milestone, we thought we'd take a closer look at EnLink Midstream, LLC's (NYSE:ENLC) future prospects. EnLink Midstream, LLC provides midstream energy services in the United States. The US$3.5b market-cap company posted a loss in its most recent financial year of US$415m and a latest trailing-twelve-month loss of US$146m shrinking the gap between loss and breakeven. As path to profitability is the topic on EnLink Midstream's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for EnLink Midstream
EnLink Midstream is bordering on breakeven, according to the 5 American Oil and Gas analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$57m in 2021. The company is therefore projected to breakeven around 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 58% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving EnLink Midstream's growth isn’t the focus of this broad overview, however, bear in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with EnLink Midstream is its debt-to-equity ratio of 142%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of EnLink Midstream to cover in one brief article, but the key fundamentals for the company can all be found in one place – EnLink Midstream's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
Valuation: What is EnLink Midstream 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 EnLink Midstream 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 EnLink Midstream’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.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
