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We feel now is a pretty good time to analyse Peninsula Energy Limited's (ASX:PEN) business as it appears the company may be on the cusp of a considerable accomplishment. Peninsula Energy Limited, together with its subsidiaries, operates as a uranium exploration company in the United States. With the latest financial year loss of US$3.5m and a trailing-twelve-month loss of US$9.3m, the AU$334m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Peninsula Energy'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.
Check out our latest analysis for Peninsula Energy
According to the 4 industry analysts covering Peninsula Energy, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$1.4m in 2024. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 60%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Peninsula Energy given that this is a high-level summary, however, 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. 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. Peninsula Energy currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
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There are key fundamentals of Peninsula 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 Peninsula Energy, take a look at Peninsula Energy's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine: