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Peninsula Energy Limited (ASX:PEN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Peninsula Energy Limited, together with its subsidiaries, operates as a uranium exploration company in the United States. The AU$268m market-cap company announced a latest loss of US$12m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Peninsula 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.
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 2025, before turning a profit of US$33m in 2026. So, the company is predicted to breakeven approximately 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 48% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Peninsula Energy's growth isn’t the focus of this broad overview, but, bear in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. Peninsula Energy currently has no debt on its balance sheet, which is rare for a loss-making 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:
This article is not intended to be a comprehensive analysis on Peninsula Energy, so if you are interested in understanding the company at a deeper level, take a look at Peninsula Energy's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:
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Valuation: What is Peninsula 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 Peninsula Energy is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Peninsula Energy’s board and the CEO’s background.
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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.