We feel now is a pretty good time to analyse Genel Energy plc's (LON:GENL) business as it appears the company may be on the cusp of a considerable accomplishment. Genel Energy plc, through its subsidiaries, operates as an independent oil and gas exploration and production company. On 31 December 2022, the UK£308m market-cap company posted a loss of US$7.3m for its most recent financial year. As path to profitability is the topic on Genel Energy's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Genel Energy

According to the 4 industry analysts covering Genel Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$17m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of -48% is expected, earnings-per-share-growth

We're not going to go through company-specific developments for Genel Energy given that this is a high-level summary, however, take into account that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Genel Energy currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Genel Energy's case is 51%. 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 Genel Energy, so if you are interested in understanding the company at a deeper level, take a look at Genel Energy's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:



Valuation: What is Genel 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 Genel 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 Genel 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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