We feel now is a pretty good time to analyse Europa Oil & Gas (Holdings) plc's (LON:EOG) business as it appears the company may be on the cusp of a considerable accomplishment. Europa Oil & Gas (Holdings) plc, together with its subsidiaries, engages in the exploration, development, and production of oil and gas properties in the United Kingdom, Morocco, and Ireland. The UK£11m market-cap company’s loss lessened since it announced a UK£5.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£2.5m, as it approaches breakeven. Many investors are wondering about the rate at which Europa Oil & Gas (Holdings) will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Europa Oil & Gas (Holdings)

Expectations from some of the British Oil and Gas analysts is that Europa Oil & Gas (Holdings) is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£1.5m in 2022. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 155% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Europa Oil & Gas (Holdings)'s upcoming projects, 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 14% 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.

Next Steps:

There are too many aspects of Europa Oil & Gas (Holdings) to cover in one brief article, but the key fundamentals for the company can all be found in one place – Europa Oil & Gas (Holdings)'s company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

1. Valuation: What is Europa Oil & Gas (Holdings) 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 Europa Oil & Gas (Holdings) 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 Europa Oil & Gas (Holdings)’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.

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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