Bannerman Energy Ltd (ASX:BMN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Bannerman Energy Ltd engages in the exploration and development of uranium properties in Africa. On 30 June 2024, the AU$495m market-cap company posted a loss of AU$9.5m for its most recent financial year. Many investors are wondering about the rate at which Bannerman Energy will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Bannerman Energy

According to the 2 industry analysts covering Bannerman Energy, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of AU$34m in 2027. The company is therefore projected to breakeven around 3 years 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 60%, 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 Bannerman Energy's growth isn’t the focus of this broad overview, but, keep in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Bannerman Energy currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Bannerman Energy which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Bannerman Energy, take a look at Bannerman Energy's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

1. Valuation: What is Bannerman 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 Bannerman 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 Bannerman 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.

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.