Paladin Energy Ltd (ASX:PDN) About To Shift From Loss To Profit

Paladin Energy Ltd (ASX:PDN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Paladin Energy Ltd develops, explores for, owns, and operates uranium mines in Australia, Canada, and Africa. On 30 June 2023, the AU$3.0b market-cap company posted a loss of US$11m for its most recent financial year. Many investors are wondering about the rate at which Paladin Energy will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Paladin Energy

Paladin Energy is bordering on breakeven, according to the 7 Australian Oil and Gas analysts. They expect the company to post a final loss in 2023, before turning a profit of US$48m in 2024. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 39% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Paladin Energy's growth isn’t the focus of this broad overview, though, bear in mind that generally energy companies, depending on the stage of operation and resource produced, 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 27% 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:

This article is not intended to be a comprehensive analysis on Paladin Energy, so if you are interested in understanding the company at a deeper level, 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 research:

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.

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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.