Yahoo Finance Peninsula Energy Limited (ASX:PEN) Has Found A Path To Profitability
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.
Next Steps:
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:
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.
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.
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.
