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We feel now is a pretty good time to analyse Reabold Resources Plc's (LON:RBD) business as it appears the company may be on the cusp of a considerable accomplishment. Reabold Resources Plc invests in upstream oil and gas projects. The UK£55m market-cap company’s loss lessened since it announced a UK£4.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£3.0m, as it approaches breakeven. As path to profitability is the topic on Reabold Resources' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 2 of the British Oil and Gas analysts is that Reabold Resources is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of UK£800k in 2022. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 95%, which is rather optimistic! 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 Reabold Resources given that this is a high-level summary, but, 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 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. Reabold Resources currently has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are key fundamentals of Reabold Resources 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 Reabold Resources, take a look at Reabold Resources' company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:
Historical Track Record: What has Reabold Resources' 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 Reabold Resources' 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. 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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