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With the business potentially at an important milestone, we thought we'd take a closer look at Range Resources Corporation's (NYSE:RRC) future prospects. Range Resources Corporation operates as an independent natural gas, natural gas liquids (NGLs), and oil company in the United States. The US$5.9b market-cap company’s loss lessened since it announced a US$712m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$510m, as it approaches breakeven. Many investors are wondering about the rate at which Range Resources 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.
Range Resources is bordering on breakeven, according to the 16 American Oil and Gas analysts. They expect the company to post a final loss in 2020, before turning a profit of US$207m in 2021. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 50%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Range Resources given that this is a high-level summary, but, bear in mind that generally energy 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 we wrap up, there’s one issue worth mentioning. Range Resources currently has a debt-to-equity ratio of over 2x. 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 in investing in the loss-making company.
There are too many aspects of Range Resources to cover in one brief article, but the key fundamentals for the company can all be found in one place – Range Resources' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Range Resources 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 Range Resources 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 Range Resources’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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