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When Will Paladin Energy Limited (ASX:PDN) Turn A Profit?

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Paladin Energy Limited's (ASX:PDN) future prospects. Paladin Energy Limited develops and operates uranium mines in Australia, Canada, and Africa. The AU$1.8b market-cap company posted a loss in its most recent financial year of US$44m and a latest trailing-twelve-month loss of US$28m shrinking the gap between loss and breakeven. As path to profitability is the topic on Paladin Energy's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Paladin Energy

Paladin Energy is bordering on breakeven, according to the 4 Australian Oil and Gas analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$77m in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? 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. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Paladin Energy's growth isn’t the focus of this broad overview, but, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 31% 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 Paladin 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 Paladin Energy, take a look at Paladin Energy's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

  1. Valuation: What is Paladin Energy 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 Paladin Energy 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 Paladin 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.