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Loss-Making Northern Oil and Gas, Inc. (NYSE:NOG) Set To Breakeven

·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at Northern Oil and Gas, Inc.'s (NYSE:NOG) future prospects. Northern Oil and Gas, Inc., an independent energy company, engages in the acquisition, exploration, exploitation, development, and production of crude oil and natural gas properties in the United States. The company’s loss has recently broadened since it announced a US$8.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$139m, moving it further away from breakeven. The most pressing concern for investors is Northern Oil and Gas' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Northern Oil and Gas

Consensus from 4 of the American Oil and Gas analysts is that Northern Oil and Gas is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$240m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 85% is expected, which signals high confidence from analysts. 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 Northern Oil and Gas' growth isn’t the focus of this broad overview, though, 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Northern Oil and Gas is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of Northern Oil and Gas to cover in one brief article, but the key fundamentals for the company can all be found in one place – Northern Oil and Gas' company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

  1. Valuation: What is Northern Oil and Gas 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 Northern Oil and Gas 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 Northern Oil and Gas’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.

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