When Will Peak Rare Earths Limited (ASX:PEK) Turn A Profit?

We feel now is a pretty good time to analyse Peak Rare Earths Limited's (ASX:PEK) business as it appears the company may be on the cusp of a considerable accomplishment. Peak Rare Earths Limited engages in exploration and evaluation of mineral licenses in Tanzania. The company’s loss has recently broadened since it announced a AU$29m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$35m, moving it further away from breakeven. The most pressing concern for investors is Peak Rare Earths' path to profitability – when will it 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 Peak Rare Earths

Peak Rare Earths is bordering on breakeven, according to the 2 Australian Metals and Mining analysts. They expect the company to post a final loss in 2025, before turning a profit of AU$20m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. 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 122% is expected, which is rather optimistic! 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, though, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, 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. Peak Rare Earths currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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 key fundamentals of Peak 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 Peak Rare Earths, take a look at Peak Rare Earths' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

1. 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.
2. 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.
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.