Loss-Making USA Rare Earth, Inc. (NASDAQ:USAR) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at USA Rare Earth, Inc.'s (NASDAQ:USAR) future prospects. USA Rare Earth, Inc. engages in mining, processing, and supplying rare earths and other critical minerals. The US$3.5b market-cap company posted a loss in its most recent financial year of US$13m and a latest trailing-twelve-month loss of US$22m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is USA Rare Earth's 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.

According to some industry analysts covering USA Rare Earth, breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$16m in 2027. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for USA Rare Earth given that this is a high-level summary, but, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, 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.

View our latest analysis for USA Rare Earth

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 1.3% 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 USA Rare Earth 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 USA Rare Earth, take a look at USA Rare Earth's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

1. Historical Track Record: What has USA Rare Earth's 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 USA Rare Earth'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.