When Will Oil States International, Inc. (NYSE:OIS) Turn A Profit?
Oil States International, Inc. (NYSE:OIS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Oil States International, Inc., through its subsidiaries, provides oilfield products and services for the drilling, completion, subsea, production, and infrastructure sectors of the oil and gas industry worldwide. With the latest financial year loss of US$468m and a trailing-twelve-month loss of US$63m, the US$403m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Oil States International's 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.
View our latest analysis for Oil States International
Consensus from 6 of the American Energy Services analysts is that Oil States International is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$12m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 95% year-on-year, on average, which is extremely buoyant. 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 Oil States International given that this is a high-level summary, though, bear in mind that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high 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 prudently, with debt making up 25% 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:
This article is not intended to be a comprehensive analysis on Oil States International, so if you are interested in understanding the company at a deeper level, take a look at Oil States International's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
Valuation: What is Oil States International 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 Oil States International 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 Oil States International’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
