WPX Energy Inc (NYSE:WPX): Is Breakeven Near?
WPX Energy Inc’s (NYSE:WPX): WPX Energy, Inc., an independent oil and natural gas exploration and production company, engages in the exploitation and development of unconventional properties in the United States. The US$5.59B market-cap company announced a latest loss of -US$26.00M on 31 December 2017 for its most recent financial year result. As path to profitability is the topic on WPX’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for WPX.
View our latest analysis for WPX Energy
WPX is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2018, before generating positive profits of US$174.56M in 2019. Therefore, WPX is expected to breakeven roughly a few months from now. What rate will WPX 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 47.42%, which signals high confidence from analysts. If this rate turns out to be too aggressive, WPX may become profitable much later than analysts predict.
Underlying developments driving WPX’s growth isn’t the focus of this broad overview, though, keep in mind that generally oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I would like to bring into light with WPX is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in WPX’s case is 62.39%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on WPX, so if you are interested in understanding the company at a deeper level, take a look at WPX’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further examine:
Valuation: What is WPX 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 WPX 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 WPX 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.
