PDC Energy Inc’s (NASDAQ:PDCE) Path To Profitability
PDC Energy Inc’s (NASDAQ:PDCE): PDC Energy, Inc., an independent exploration and production company, acquires, explores for, develops, and produces crude oil, natural gas, and natural gas liquids in the United States. The US$3.17B market-cap company announced a latest loss of -US$127.50M on 31 December 2017 for its most recent financial year result. Many investors are wondering the rate at which PDCE will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PDCE.
View our latest analysis for PDC Energy
Expectation from analysts is PDCE is on the verge of breakeven. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$169.02M in 2018. So, PDCE is predicted to breakeven approximately a few months from now. What rate will PDCE have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 46.48%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving PDCE’s growth isn’t the focus of this broad overview, but, bear in mind that typically an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with PDCE is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in PDCE’s case is 46.11%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of PDCE to cover in one brief article, but the key fundamentals for the company can all be found in one place – PDCE’s company page on Simply Wall St. I’ve also put together a list of key factors you should further examine:
Valuation: What is PDCE 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 PDCE 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 PDC Energy’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
