Blue Energy Limited (ASX:BLU): Is Breakeven Near?

Blue Energy Limited (ASX:BLU) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Blue Energy Limited, an oil and gas exploration company, engages in the exploration, evaluation, and development of conventional and unconventional oil and gas resources primarily in Queensland and the Northern Territory in Australia. On 30 June 2024, the AU$17m market-cap company posted a loss of AU$14m for its most recent financial year. 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

According to some industry analysts covering Blue Energy, breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of AU$1.4m in 2027. Therefore, the company is expected to breakeven roughly 3 years from now. 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 110%, 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 Blue Energy's growth isn’t the focus of this broad overview, though, bear in mind that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. 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. 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:

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

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.

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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.