Vertex Energy, Inc. (NASDAQ:VTNR) About To Shift From Loss To Profit
Vertex Energy, Inc. (NASDAQ:VTNR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Vertex Energy, Inc., an energy transition company that focuses on the production and distribution of conventional and alternative fuels. On 31 December 2022, the US$748m market-cap company posted a loss of US$17m for its most recent financial year. The most pressing concern for investors is Vertex Energy'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.
Check out our latest analysis for Vertex Energy
Consensus from 6 of the American Oil and Gas analysts is that Vertex Energy is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$127m in 2023. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 65%, which signals high confidence from analysts. 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 Vertex Energy given that this is a high-level summary, however, keep in mind that by and large 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.
One thing we would like to bring into light with Vertex Energy is its debt-to-equity ratio of 182%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Vertex Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Vertex Energy's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is Vertex Energy 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 Vertex Energy 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 Vertex Energy’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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