USA Rare Earth, Inc. (USAR) Stock Analysis
USA Rare Earth, Inc. (USAR) Stock Analysis
Overall Grade: F (Concerning)
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USA Rare Earth, Inc. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | -30.9% | Below expectations |
| FCF Margin | 0.0% | Cash flow pressure |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is USA Rare Earth, Inc.'s Profitability and ROIC?
USA Rare Earth, Inc.'s return on invested capital of -30.9% is below the typical cost of capital.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -30.9% | Red flag | Below cost of capital |
How Strong is USA Rare Earth, Inc.'s Cash Flow Quality?
USA Rare Earth, Inc. generated $-23.4M in free cash flow over the trailing twelve months, representing a 0.0% margin. FCF was positive in N/A of the last 8 quarters, indicating variable cash generation.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 0.0% | Red flag | Thin cash margins |
| Free Cash Flow (TTM) | $-23.4M | Red flag | Cash burn |
| OCF/Net Income | 0.1x | Warning | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is USA Rare Earth, Inc.'s Financial Health?
Is USA Rare Earth, Inc. Stock Overvalued or Undervalued?
USA Rare Earth, Inc. trades at a P/E of -9.1x, representing a premium to the sector median of N/A. Free cash flow yield of -3.2% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | -9.1x | Red flag | Reasonable valuation |
| EV/Sales | 0.0x | Excellent | Attractive revenue multiple |
| FCF Yield | -3.2% | Warning | Lower cash yield |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -30.9% | Bottom 10% | -3.0x below |
| Free Cash Flow Margin | 0.0% | Bottom 10% | 0.0x below |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: -30.9% (Red flag)
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 0.0% (Red flag)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: -3.2% (Red flag)
Frequently Asked Questions
Q: What is USA Rare Earth, Inc.'s Return on Invested Capital (ROIC)?
USA Rare Earth, Inc. (USAR) has a trailing twelve-month Return on Invested Capital (ROIC) of -30.9%. This compares below the sector median of 10.2%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is USA Rare Earth, Inc.'s Free Cash Flow Margin?
USA Rare Earth, Inc. (USAR) has a free cash flow margin of 0.0%, generating $-23.4 million in free cash flow over the trailing twelve months. Negative free cash flow means the company is consuming cash, which may require financing.
Q: Is USA Rare Earth, Inc. stock overvalued or undervalued?
USA Rare Earth, Inc. (USAR) trades at a P/E ratio of -9.1x, which is above the sector median of N/A. The EV/Sales multiple is 0.0x.
Q: What is USA Rare Earth, Inc.'s revenue and earnings growth?
USA Rare Earth, Inc. (USAR) Earnings per share decreased by 85.6% compared to the prior year.
Q: Is USA Rare Earth, Inc. buying back stock?
USA Rare Earth, Inc. (USAR) repurchased $246.9 million of stock over the trailing twelve months.
Q: How does USA Rare Earth, Inc. compare to competitors in Materials?
Compared to other companies in Materials, USA Rare Earth, Inc. (USAR) shows: ROIC of -30.9% is below the sector median of 10.2% (-3.0x median). FCF margin of 0.0% trails the sector median of 4.7%. These rankings are based on MetricDuck's analysis of all Materials companies with available SEC filings.
Q: What warning signs should I watch for with USA Rare Earth, Inc.?
Investors in USA Rare Earth, Inc. (USAR) should monitor these potential warning signs: 1) FCF margin is thin at 0.0%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q3 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.