Analysts Are Optimistic We’ll See A Profit From 3R Petroleum Óleo e Gás S.A.

3R Petroleum Óleo e Gás S.A. (BVMF:RRRP3) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 3R Petroleum Óleo e Gás S.A. engages in the exploration and production of oil and natural gas in Brazil. The R$8.9b market-cap company announced a latest loss of R$905k on 31 December 2021 for its most recent financial year result. Many investors are wondering about the rate at which 3R Petroleum Óleo e Gás 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.

View our latest analysis for 3R Petroleum Óleo e Gás

Consensus from 4 of the Brazilian Oil and Gas analysts is that 3R Petroleum Óleo e Gás is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of R$1.3b in 2022. 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 65% 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.

Given this is a high-level overview, we won’t go into details of 3R Petroleum Óleo e Gás’ upcoming projects, however, take into account that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 1.2% 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 3R Petroleum Óleo e Gás to cover in one brief article, but the key fundamentals for the company can all be found in one place – 3R Petroleum Óleo e Gás’ company page on Simply Wall St. We’ve also put together a list of important aspects you should further examine:

1. Valuation: What is 3R Petroleum Óleo e Gás 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 3R Petroleum Óleo e Gás 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 3R Petroleum Óleo e Gás’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.