Europa Oil & Gas (Holdings) plc’s (LON:EOG) Path To Profitability
Europa Oil & Gas (Holdings) plc’s (AIM:EOG): Europa Oil & Gas (Holdings) plc, together with its subsidiaries, engages in the exploration and development of oil and gas properties in the United Kingdom, Ireland, and France. The UK£10.85M market-cap company announced a latest loss of -UK£491.00K on 31 July 2017 for its most recent financial year result. As path to profitability is the topic on EOG’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for EOG.
View our latest analysis for Europa Oil & Gas (Holdings)
According to the industry analysts covering EOG, breakeven is near. They expect the company to post a final loss in 2017, before turning a profit of UK£100.00K in 2018. So, EOG is predicted to breakeven approximately a couple of months from now! What rate will EOG 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 200.13%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving EOG’s growth isn’t the focus of this broad overview, though, bear in mind that typically an oil and gas 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.
Before I wrap up, there’s one aspect worth mentioning. EOG currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which usually has a high level of debt relative to its equity. EOG currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on EOG, so if you are interested in understanding the company at a deeper level, take a look at EOG’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:
Historical Track Record: What has EOG’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 Europa Oil & Gas (Holdings)’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 pass 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.
