Capricorn Energy PLC’s (LON:CNE) Shift From Loss To Profit

We feel now is a pretty good time to analyse Capricorn Energy PLC’s (LON:CNE) business as it appears the company may be on the cusp of a considerable accomplishment. Capricorn Energy PLC, an independent energy company, engages in the exploration, development, production, and sale of oil and gas worldwide. The UK£155m market-cap company posted a loss in its most recent financial year of US$13m and a latest trailing-twelve-month loss of US$22m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Capricorn Energy’s path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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According to the 4 industry analysts covering Capricorn Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$5.7m in 2027. Therefore, the company is expected 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 85%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Capricorn Energy’s growth isn’t the focus of this broad overview, but, keep in mind that by and large energy 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.

Check out our latest analysis for Capricorn Energy

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 18% of equity. This means that it 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 Capricorn Energy, so if you are interested in understanding the company at a deeper level, take a look at Capricorn Energy’s company page on Simply Wall St. We’ve also put together a list of key aspects you should further research:

1. Valuation: What is Capricorn 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 Capricorn Energy is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Capricorn Energy’s board and the CEO’s background.

3. 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.

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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.