QPM Energy Limited (ASX:QPM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. QPM Energy Limited, together with its subsidiaries, operates as an independent gas producer in Australia. On 30 June 2024, the AU$139m market-cap company posted a loss of AU$24m for its most recent financial year. As path to profitability is the topic on QPM Energy's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for QPM Energy

Expectations from some of the Australian Metals and Mining analysts is that QPM Energy is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$33m in 2025. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 113% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving QPM Energy's growth isn’t the focus of this broad overview, though, keep in mind that generally a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with QPM Energy is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in QPM Energy's case is 58%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of QPM Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – QPM Energy's company page on Simply Wall St. We've also put together a list of key factors you should further examine:

1. Valuation: What is QPM 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 QPM 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 QPM 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.