Yahoo Finance Rainbow Rare Earths Limited (LON:RBW): Is Breakeven Near?
With the business potentially at an important milestone, we thought we'd take a closer look at Rainbow Rare Earths Limited's (LON:RBW) future prospects. Rainbow Rare Earths Limited engages in the mining and exploration of rare earth minerals. On 30 June 2023, the UK£80m market-cap company posted a loss of US$12m for its most recent financial year. The most pressing concern for investors is Rainbow Rare Earths' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Rainbow Rare Earths
Rainbow Rare Earths is bordering on breakeven, according to the 3 British Metals and Mining analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$2.0m 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 61% 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.
Given this is a high-level overview, we won’t go into details of Rainbow Rare Earths' upcoming projects, though, keep in mind that generally a metal and mining business has lumpy cash flows which are contingent on the natural resource mined 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. The company has managed its capital prudently, with debt making up 4.0% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Rainbow Rare Earths to cover in one brief article, but the key fundamentals for the company can all be found in one place – Rainbow Rare Earths' company page on Simply Wall St. We've also put together a list of key aspects you should further research:
Valuation: What is Rainbow Rare Earths 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 Rainbow Rare Earths 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 Rainbow Rare Earths’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.
