We feel now is a pretty good time to analyse Blue Energy Limited's (ASX:BLU) business as it appears the company may be on the cusp of a considerable accomplishment. Blue Energy Limited, an energy company, engages in the exploration, evaluation, and development of conventional and unconventional oil and gas resources primarily in Queensland and the Northern Territory, Australia. The AU$15m market-cap company announced a latest loss of AU$14m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Blue Energy 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.

Check out our latest analysis for Blue Energy

Expectations from some of the Australian Oil and Gas analysts is that Blue Energy is on the verge of breakeven. They anticipate the company to incur a final loss in 2026, before generating positive profits of AU$1.4m in 2027. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 110% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Blue Energy given that this is a high-level summary, however, keep in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.05% 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:

This article is not intended to be a comprehensive analysis on Blue Energy, so if you are interested in understanding the company at a deeper level, take a look at Blue Energy's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

1. Historical Track Record: What has Blue Energy's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Blue 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.