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New Fortress Energy LLC's (NASDAQ:NFE): New Fortress Energy LLC operates as an energy infrastructure company worldwide. With the latest financial year loss of -US$78.1m and a trailing-twelve month of -US$80.7m, the US$2.0b market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is NFE’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NFE, its year of breakeven and its implied growth rate.
Consensus from the 4 Oil and Gas analysts is NFE is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$28m in 2020. Therefore, NFE is expected to breakeven roughly a few months from now. How fast will NFE have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which signals high confidence from analysts. 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 NFE’s upcoming projects, however, bear in mind that typically 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.
Before I wrap up, there’s one issue worth mentioning. NFE currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in NFE’s case is 96%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on NFE, so if you are interested in understanding the company at a deeper level, take a look at NFE’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further examine:
- Valuation: What is NFE 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 NFE 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 New Fortress 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.