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, engages in the exploration, development, and mining of uranium deposits in the United States. With the latest financial year loss of US$4.6m and a trailing-twelve-month loss of US$3.6m, the AU$226m market-cap company alleviated its loss by moving closer towards its target of breakeven. 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Peninsula Energy
According to the 3 industry analysts covering Peninsula Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$1.3m in 2024. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 123% year-on-year, on average, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Peninsula Energy 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.
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 relevant aspects you should further research: