Market Sentiment Around Loss-Making Mammoth Energy Services, Inc. (NASDAQ:TUSK)
With the business potentially at an important milestone, we thought we'd take a closer look at Mammoth Energy Services, Inc.'s (NASDAQ:TUSK) future prospects. Mammoth Energy Services, Inc. operates as an energy service company. On 31 December 2022, the US$202m market-cap company posted a loss of US$619k for its most recent financial year. The most pressing concern for investors is Mammoth Energy Services' 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.
See our latest analysis for Mammoth Energy Services
According to some industry analysts covering Mammoth Energy Services, breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$40m in 2024. The company is therefore projected to breakeven just over a year from today. 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 18% is expected, which is relatively reasonable. 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, we won’t go into details of Mammoth Energy Services' upcoming projects, 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 a double-digit growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 22% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Mammoth Energy Services 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 Mammoth Energy Services, take a look at Mammoth Energy Services' company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Valuation: What is Mammoth 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 Mammoth Energy Services 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 Mammoth Energy Services’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.
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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