Stock Analysis

Iris Energy Limited's (NASDAQ:IREN) Profit Outlook

NasdaqGS:IREN
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We feel now is a pretty good time to analyse Iris Energy Limited's (NASDAQ:IREN) business as it appears the company may be on the cusp of a considerable accomplishment. Iris Energy Limited owns and operates bitcoin mining data centers. With the latest financial year loss of US$420m and a trailing-twelve-month loss of US$163m, the US$362m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Iris Energy's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Iris Energy

Iris Energy is bordering on breakeven, according to the 7 American Software analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$42m in 2025. The company is therefore projected to breakeven around 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 91% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGS:IREN Earnings Per Share Growth July 26th 2023

We're not going to go through company-specific developments for Iris Energy given that this is a high-level summary, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Iris Energy is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Iris Energy's case is 41%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Iris Energy 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 Iris Energy, take a look at Iris Energy's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

  1. Valuation: What is Iris 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 Iris 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 Iris 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.

Valuation is complex, but we're helping make it simple.

Find out whether Iris Energy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.