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Chariot Limited (LON:CHAR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Chariot Limited, together with its subsidiaries, engages in the oil and gas exploration and appraisal activities. On 31 December 2023, the UK£75m market-cap company posted a loss of US$16m for its most recent financial year. As path to profitability is the topic on Chariot's investors mind, we've decided to gauge market sentiment. 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 Chariot
Chariot is bordering on breakeven, according to the 3 British Oil and Gas analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$9.0m in 2025. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 86% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Chariot's upcoming projects, though, bear in mind that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Chariot 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 Chariot 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 Chariot, take a look at Chariot's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
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Valuation: What is Chariot 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 Chariot is currently mispriced by the market.
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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 Chariot’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.