When Will Lilis Energy Inc (NYSEMKT:LLEX) Breakeven?
Lilis Energy Inc’s (NYSEMKT:LLEX): Lilis Energy, Inc., an independent oil and natural gas company, engages in the acquisition, exploration, development, and production of conventional and unconventional oil and natural gas properties. The US$324.5m market-cap posted a loss in its most recent financial year of -US$84.8m and a latest trailing-twelve-month loss of -US$71.3m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which LLEX will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for LLEX.
See our latest analysis for Lilis Energy
According to the industry analysts covering LLEX, breakeven is near. They anticipate the company to incur a final loss in 2018, before generating positive profits of US$5.6m in 2019. Therefore, LLEX is expected to breakeven roughly a few months from now. What rate will LLEX 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 98.7%, 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 LLEX’s upcoming projects, but, take into account that by and large oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. 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 issue worth mentioning. LLEX currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and LLEX has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on LLEX, so if you are interested in understanding the company at a deeper level, take a look at LLEX’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should look at:
Historical Track Record: What has LLEX’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 Lilis 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.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
