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When Can We Expect A Profit From Reabold Resources Plc (LON:RBD)?

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·3 min read
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We feel now is a pretty good time to analyse Reabold Resources Plc's (LON:RBD) business as it appears the company may be on the cusp of a considerable accomplishment. Reabold Resources Plc invests in upstream oil and gas projects. With the latest financial year loss of UK£2.7m and a trailing-twelve-month loss of UK£3.5m, the UK£12m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Reabold Resources' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Reabold Resources

According to the 3 industry analysts covering Reabold Resources, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£3.2m in 2023. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 82%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Reabold Resources' growth isn’t the focus of this broad overview, however, keep 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.

Before we wrap up, there’s one aspect worth mentioning. Reabold Resources currently has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which typically has high debt relative to its equity. The company 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 Reabold Resources, so if you are interested in understanding the company at a deeper level, take a look at Reabold Resources' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

  1. Historical Track Record: What has Reabold Resources' 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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Reabold Resources' board and the CEO’s background.

  3. 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.