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With the business potentially at an important milestone, we thought we'd take a closer look at International Seaways, Inc.'s (NYSE:INSW) future prospects. International Seaways, Inc. owns and operates a fleet of oceangoing vessels for the transportation of crude oil and petroleum products in the International Flag trade. The company’s loss has recently broadened since it announced a US$5.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$135m, moving it further away from breakeven. Many investors are wondering about the rate at which International Seaways will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 7 of the American Oil and Gas analysts is that International Seaways is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$143m in 2022. Therefore, the company is expected to breakeven just over a year from now. 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 113%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of International Seaways' upcoming projects, however, bear in mind that by and large energy 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 we wrap up, there’s one issue worth mentioning. International Seaways currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in International Seaways' case is 56%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of International Seaways which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at International Seaways, take a look at International Seaways' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
Valuation: What is International Seaways 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 International Seaways 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 International Seaways’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. 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.
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