Sanchez Midstream Partners LP’s (AMEX:SNMP): Sanchez Midstream Partners LP engages in the acquisition, development, ownership, and operation of midstream and other energy-related assets in the United States. The US$183.18M market-cap company’s loss lessens since it announced a -US$40.71M bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$30.86M, as it approaches breakeven. As path to profitability is the topic on SNMP’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for SNMP, its year of breakeven and its implied growth rate.
SNMP is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2018, before turning a profit of US$7.40M in 2019. So, SNMP is predicted to breakeven approximately a couple of months from now! What rate will SNMP 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 103.26%, which signals high confidence from analysts. If this rate turns out to be too aggressive, SNMP may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into detail the detail of SNMP’s upcoming projects, but, keep 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.
One thing I would like to bring into light with SNMP is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SNMP’s case is 60.26%. 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 SNMP 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 SNMP, take a look at SNMP’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should look at:
- Valuation: What is SNMP 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 SNMP 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 Sanchez Midstream Partners’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.