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The path to profitability for Africa Energy Corp. (CVE: AFE)

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With the company potentially at an important milestone, we thought we would take a closer look Africa Energy Corp. (CVE: AFE) future prospects. Africa Energy Corp. operates as an oil and gas exploration and production company in South Africa and Namibia. The C $ 356 million market-capitalization company recorded a loss of US $ 4.3 million in its most recent fiscal year and a last year-over-year loss of US $ 4.3 million, resulting in a loss of US $ 4.3 million in its last year. even greater gap between the loss and the breakeven point. As the path to profitability is the topic of concern to Africa Energy investors, we decided to assess market sentiment. We’ve put together a brief rundown of industry analysts’ expectations for the company, its breakeven year, and its implied growth rate.

Check out our latest analysis for Africa Energy

According to the 2 industry analysts covering Africa Energy, the consensus is that the balance is near. They expect the company to make a terminal loss in 2022, before making a profit of $ 2.0 million in 2023. Thus, the company is expected to break even in about 2 years. How fast will the company have to grow from one year to the next to reach equilibrium on that date? Using a line of best fit, we calculated an average annual growth rate of 81%, indicating a high level of analyst confidence. If this rate turns out to be too aggressive, the company could become profitable much later than analysts predict.

TSXV: AFE Growth in earnings per share November 16, 2021

Since this is a high-level overview, we won’t go into the details of Africa Energy’s upcoming projects, but keep in mind that overall, the big energy companies, depending on the stage of exploitation and the resources produced, have irregular cash periods. . This means that the great growth rates to come are not abnormal, as the business begins to reap the rewards of past investments.

One thing we would like to point out is that Africa Energy has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which typically has high debt relative to its equity. The company currently operates purely on funding from its shareholders and has no debt, reducing concerns about repayments and making it a less risky investment.

Next steps:

There are some fundamentals of Africa Energy that are not covered in this article, but we have to stress again that this is only a basic overview. For a more comprehensive overview of Africa Energy, check out the Africa Energy company page on Simply Wall St. We have also compiled a list of critical factors you should take a closer look at:

  1. Evaluation: What is Africa Energy worth today? Has the potential for future growth already been factored into the price? The intrinsic value infographic in our free research report helps to visualize whether Africa Energy is currently poorly valued by the market.
  2. Management team: An experienced management team at the helm increases our confidence in the company – take a look at the Africa Energy board members and the CEO’s background.
  3. Other high performing stocks: Are there other stocks that offer better prospects with a proven track record? Check out our free list of these great stocks here.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

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