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TETRA Technologies, Inc.'s (NYSE:TTI): TETRA Technologies, Inc., together with its subsidiaries, operates as a diversified oil and gas services company. The US$201m market-cap posted a loss in its most recent financial year of -US$20.1m and a latest trailing-twelve-month loss of -US$18.2m shrinking the gap between loss and breakeven. As path to profitability is the topic on TTI’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for TTI, its year of breakeven and its implied growth rate.
TTI is bordering on breakeven, according to the 8 Energy Services analysts. They expect the company to post a final loss in 2019, before turning a profit of US$3.9m in 2020. So, TTI is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which TTI must grow year-on-year. It turns out an average annual growth rate of 123% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, TTI may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for TTI given that this is a high-level summary, however, take into account that typically 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 I wrap up, there’s one issue worth mentioning. TTI currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and TTI has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of TTI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at TTI, take a look at TTI’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
Historical Track Record: What has TTI'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 TETRA Technologies’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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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