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Oil States International, Inc. (NYSE:OIS): Is Breakeven Near?

Simply Wall St

Oil States International, Inc.'s (NYSE:OIS): 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. The US$936m market-cap posted a loss in its most recent financial year of -US$19.1m and a latest trailing-twelve-month loss of -US$42.7m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is OIS’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for OIS’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Oil States International

According to the 15 industry analysts covering OIS, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$905k in 2020. Therefore, OIS is expected to breakeven roughly a couple of months from now! How fast will OIS have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 127% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, OIS may become profitable much later than analysts predict.

NYSE:OIS Past and Future Earnings, September 16th 2019

Underlying developments driving OIS’s growth isn’t the focus of this broad overview, though, bear in mind that generally oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one aspect worth mentioning. OIS has managed its capital prudently, with debt making up 21% of equity. This means that OIS 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 OIS, so if you are interested in understanding the company at a deeper level, take a look at OIS’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:

  1. Valuation: What is OIS 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 OIS 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 Oil States International’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.