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Loss-Making Ensign Energy Services Inc. (TSE:ESI) Expected To Breakeven In The Medium-Term

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Ensign Energy Services Inc.'s (TSE:ESI) future prospects. Ensign Energy Services Inc., together with its subsidiaries, provides oilfield services to the crude oil and natural gas industries in Canada, the United States, and internationally. The CA$583m market-cap company’s loss lessened since it announced a CA$156m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$106m, as it approaches breakeven. Many investors are wondering about the rate at which Ensign Energy Services will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Ensign Energy Services

According to the 8 industry analysts covering Ensign Energy Services, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$23m in 2023. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 105% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

Underlying developments driving Ensign Energy Services' growth isn’t the focus of this broad overview, however, take into account that by and large energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Ensign Energy Services currently has a debt-to-equity ratio of 118%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Ensign Energy Services to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ensign Energy Services' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:

  1. Valuation: What is Ensign Energy Services 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 Ensign Energy Services is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Ensign Energy Services’s 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.