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With the business potentially at an important milestone, we thought we'd take a closer look at Africa Energy Corp.'s (CVE:AFE) future prospects. Africa Energy Corp. operates as an oil and gas exploration and production company in South Africa and Namibia. The CA$56m market-cap company announced a latest loss of US$101m on 31 December 2024 for its most recent financial year result. Many investors are wondering about the rate at which Africa 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.
Expectations from some of the Canadian Oil and Gas analysts is that Africa Energy is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$3.9m in 2026. Therefore, the company is expected to breakeven just over a year 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 150%, which is extremely buoyant. 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 Africa Energy's upcoming projects, however, keep in mind that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
See our latest analysis for Africa Energy
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 32% 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 key fundamentals of Africa 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 Africa Energy, take a look at Africa Energy's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:
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Historical Track Record: What has Africa 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.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Africa Energy's board and the CEO’s background.
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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.
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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.