When Will Energy Fuels Inc. (TSE:EFR) Become Profitable?

By
Simply Wall St
Published
April 09, 2021
TSX:EFR

Energy Fuels Inc. (TSE:EFR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Energy Fuels Inc., together with its subsidiaries, engages in the extraction, recovery, exploration, and sale of conventional and in situ uranium recovery in the United States. On 31 December 2020, the CA$1.1b market-cap company posted a loss of US$28m for its most recent financial year. The most pressing concern for investors is Energy Fuels' path to profitability – when will it 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 Energy Fuels

Consensus from 4 of the Canadian Oil and Gas analysts is that Energy Fuels is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$26m in 2022. So, the company is predicted to breakeven just over a year 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 102%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
TSX:EFR Earnings Per Share Growth April 9th 2021

Underlying developments driving Energy Fuels' growth isn’t the focus of this broad overview, but, take into account that generally 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. Energy Fuels currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas 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 Energy Fuels to cover in one brief article, but the key fundamentals for the company can all be found in one place – Energy Fuels' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

  1. Valuation: What is Energy Fuels 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 Energy Fuels 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 Energy Fuels’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. 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.
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