Vertex Energy Inc’s (NASDAQ:VTNR): Vertex Energy, Inc., an environmental services company, provides a range of services designed to aggregate, process, and recycle industrial and commercial waste systems in 15 states, primarily in the Gulf Coast, Midwest, and Mid-Atlantic regions of the United States. The US$34.02m market-cap posted a loss in its most recent financial year of -US$11.82m and a latest trailing-twelve-month loss of -US$11.23m shrinking the gap between loss and breakeven. The most pressing concern for investors is VTNR’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for VTNR’s growth and when analysts expect the company to become profitable.
Expectation from Oil and Gas analysts is VTNR is on the verge of breakeven. They anticipate the company to incur a final loss in -1, before generating positive profits of US$0 in . So, VTNR is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which VTNR must grow year-on-year. It turns out an average annual growth rate of 65.26% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for VTNR given that this is a high-level summary, though, keep 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’d like to point out is that VTNR has managed its capital prudently, with debt making up 38.92% of equity. This means that VTNR has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on VTNR, so if you are interested in understanding the company at a deeper level, take a look at VTNR’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should look at:
- Valuation: What is VTNR 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 VTNR 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 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.