Breakeven On The Horizon For Peak Rare Earths Limited (ASX:PEK)
Peak Rare Earths Limited (ASX:PEK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Peak Rare Earths Limited engages in exploration and evaluation of mineral licenses in Tanzania. The AU$51m market-cap company announced a latest loss of AU$29m on 30 June 2023 for its most recent financial year result. As path to profitability is the topic on Peak Rare Earths' 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 Peak Rare Earths
Consensus from 2 of the Australian Metals and Mining analysts is that Peak Rare Earths is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of AU$4.1m in 2026. The company is therefore projected to breakeven around 2 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 91%, which is extremely buoyant. 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 Peak Rare Earths' upcoming projects, but, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, 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 Peak Rare Earths has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of 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 too many aspects of Peak Rare Earths to cover in one brief article, but the key fundamentals for the company can all be found in one place – Peak Rare Earths' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
Historical Track Record: What has Peak Rare Earths' 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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Peak Rare Earths' board and the CEO’s background.
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.
