Rainbow Rare Earths Limited (LON:RBW): Are Analysts Optimistic?
Rainbow Rare Earths Limited (LON:RBW) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rainbow Rare Earths Limited engages in the mining and exploration of rare earth minerals. With the latest financial year loss of US$3.9m and a trailing-twelve-month loss of US$3.3m, the UK£94m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Rainbow Rare Earths 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.
Check out our latest analysis for Rainbow Rare Earths
Consensus from 3 of the British Metals and Mining analysts is that Rainbow Rare Earths is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$46m in 2026. Therefore, the company is expected to breakeven roughly 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 49% is expected, which is rather optimistic! 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 Rainbow Rare Earths' upcoming projects, though, bear in mind that generally a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 4.9% 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 Rainbow Rare Earths 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 Rainbow Rare Earths, take a look at Rainbow Rare Earths' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Valuation: What is Rainbow Rare Earths 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 Rainbow Rare Earths is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rainbow Rare Earths’s 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.
