Assessing USA Rare Earth (USAR) Valuation After Strong Long Term Returns And A Large DCF Upside Estimate

Simply Wall St.02-13

AdvertisementWhy USA Rare Earth (USAR) is drawing fresh attention USA Rare Earth (USAR) is back on many watchlists after its recent share price swings, with returns ranging from a 12% decline over the...

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It has a 30-day share...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"USAR":"USA Rare Earth Inc.","BK4168":"多种金属与采矿"},"translate_title":"在强劲的长期回报和较大的DCF上行估计后评估美国稀土(USAR)估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"USAR":1.98},"content_text":"AdvertisementWhy USA Rare Earth (USAR) is drawing fresh attention USA Rare Earth (USAR) is back on many watchlists after its recent share price swings, with returns ranging from a 12% decline over the past day to a gain in the past 3 months. See our latest analysis for USA Rare Earth. While the 1-day share price return of a 12.36% decline and 7-day share price return of a 7.38% decline might catch your eye, USA Rare Earth still shows stronger upward momentum over longer horizons. It has a 30-day share price return of 14.46%, a 90-day share price return of 31.68%, a year to date share price return of 34.84%, and a 1-year total shareholder return of 65.91% at a latest share price of $19.08, which hints that recent swings may reflect shifting views on both its growth potential and risk profile. If USA Rare Earth has you thinking more broadly about critical minerals, it could be worth checking our screener of 31 best rare earth metal stocks as another way to source ideas in this theme. So with USAR trading at $19.08, an intrinsic discount of about 91% and over 65% 1 year total return already on the table, is this still an opportunity or is the market already pricing in future growth potential? DCF valuation: why the model points to a big gap Our DCF model estimates a fair value of $203.33 for USA Rare Earth, compared with the latest share price of $19.08, implying a very large valuation gap. That is a meaningful difference for a company whose shares have already delivered a 65.91% 1 year total return. The SWS DCF model works by projecting a company’s future cash flows and then discounting them back to today using a required rate of return. In simple terms, it asks what those future cash flows could be worth in present dollars, then compares that figure to the market price. For USAR, this approach is especially relevant because the company is currently generating no revenue and reported a net loss of $285.381, yet analysts still forecast strong revenue growth ahead. In sectors like critical minerals, where current earnings can be limited while investment is heavy, a cash flow based view can help you frame how much of that future potential might already be reflected in the $19.08 share price. Look into how the SWS DCF model arrives at its fair value. Result: DCF Fair value of $203.33 (UNDERVALUED) However, you are still dealing with a zero revenue business, a net loss of $285.381, and a value score of 3, which could challenge bullish expectations. Find out about the key risks to this USA Rare Earth narrative.  Build Your Own USA Rare Earth Narrative If you look at the numbers and come to a different conclusion, or prefer to work from your own research, you can build a custom view in just a few minutes by starting with Do it your way. A great starting point for your USA Rare Earth research is our analysis highlighting 3 key rewards and 5 important warning signs that could impact your investment decision. Looking for more investment ideas? If you are serious about building a stronger portfolio, do not stop at a single stock. Use powerful screeners to spot opportunities others might overlook.  Target potential mispricing by checking companies our tool highlights as 55 high quality undervalued stocks before the crowd pays closer attention. Strengthen your downside protection by focusing on businesses in our solid balance sheet and fundamentals stocks screener (45 results) that pair financial resilience with quality fundamentals. Hunt for less obvious opportunities using the screener containing 23 high quality undiscovered gems, where strong fundamentals may not yet be fully appreciated by the wider market.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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