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Rising Costs & Expenses Pressure USAR: What's the Road Ahead?
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Key Takeaways
USAR commissioned Phase 1a of its Oklahoma magnet line to begin NdFeB magnet orders in Q2 2026.
USAR's SG&A jumped to $21.2M in Q1 2026 from $7M on legal, hiring and consulting costs.
USA Rare Earth posted a 34-cent Q1 loss as R&D rose to $14.2M and product costs neared revenues.
USA Rare Earth, Inc. (USAR - Free Report) remains in the early stages of commercial growth and continues to face losses as operations scale. While revenue generation has started following the acquisition of Less Common Metals, higher operating expenses tied to expansion, acquisitions and workforce growth are pressuring the company’s profitability.
In the first quarter of 2026, USAR’s cost of product revenues was $5.59 million, which was 98.1% of total revenues. In the same period, its selling, general and administrative expenses surged to $21.2 million from $7 million in the year-ago quarter due to a rise in legal & consulting costs, higher headcount & recruiting fees, and other costs.
USA Rare Earth’s research and development expenses rose to $14.2 million compared with $1.7 million reported in the year-ago quarter due to an increase in higher employee-related and development costs. As a result, the company reported a loss of 34 cents per share for the quarter.
However, USAR has achieved a key milestone with the commissioning of Phase 1a of its commercial magnet production line at the Stillwater facility in Oklahoma. The development enables USAR to start fulfilling customer orders for sintered neodymium-iron-boron (NdFeB) permanent magnets in the second quarter of 2026.
Although USA Rare Earth is making progress in scaling operations, persistent cost pressures and ongoing losses remain key concerns. The company’s ability to balance growth investments with improving revenues and cost discipline will be key to overcoming profitability pressures.
USAR’s Peer Performance
Among its major peers, NioCorp Developments Ltd. (NB - Free Report) is facing cost pressure. In the third quarter of fiscal 2026, NioCorp’s total operating expenses increased significantly on a year-over-year basis due to expenses incurred for the advancement of the Elk Creek Project. Rising costs and expenses, if not controlled, might affect NioCorp Developments’ margin performance.
Its another peer, Rio Tinto Group (RIO - Free Report) , is benefiting from rising copper production, driven by strong operational performance across its assets. However, weather-related disruptions earlier in 2025 affected Rio Tinto’s iron ore volumes. Planned maintenance activities at some copper mining projects temporarily reduced Rio Tinto’s output in 2025, while cost pressures from inflation and higher sustaining capital spending impacted margins.
USAR’s Price Performance, Valuation & Estimates
Shares of USAR have gained 232.9% in the past year compared with the industry’s growth of 55.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, USAR is trading at a forward price-to-earnings ratio of negative 85.07X against the industry’s average of 15.76X. USA Rare Earth has a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for USAR’s 2026 earnings has decreased over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
Image: Bigstock
Rising Costs & Expenses Pressure USAR: What's the Road Ahead?
Key Takeaways
USA Rare Earth, Inc. (USAR - Free Report) remains in the early stages of commercial growth and continues to face losses as operations scale. While revenue generation has started following the acquisition of Less Common Metals, higher operating expenses tied to expansion, acquisitions and workforce growth are pressuring the company’s profitability.
In the first quarter of 2026, USAR’s cost of product revenues was $5.59 million, which was 98.1% of total revenues. In the same period, its selling, general and administrative expenses surged to $21.2 million from $7 million in the year-ago quarter due to a rise in legal & consulting costs, higher headcount & recruiting fees, and other costs.
USA Rare Earth’s research and development expenses rose to $14.2 million compared with $1.7 million reported in the year-ago quarter due to an increase in higher employee-related and development costs. As a result, the company reported a loss of 34 cents per share for the quarter.
However, USAR has achieved a key milestone with the commissioning of Phase 1a of its commercial magnet production line at the Stillwater facility in Oklahoma. The development enables USAR to start fulfilling customer orders for sintered neodymium-iron-boron (NdFeB) permanent magnets in the second quarter of 2026.
Although USA Rare Earth is making progress in scaling operations, persistent cost pressures and ongoing losses remain key concerns. The company’s ability to balance growth investments with improving revenues and cost discipline will be key to overcoming profitability pressures.
USAR’s Peer Performance
Among its major peers, NioCorp Developments Ltd. (NB - Free Report) is facing cost pressure. In the third quarter of fiscal 2026, NioCorp’s total operating expenses increased significantly on a year-over-year basis due to expenses incurred for the advancement of the Elk Creek Project. Rising costs and expenses, if not controlled, might affect NioCorp Developments’ margin performance.
Its another peer, Rio Tinto Group (RIO - Free Report) , is benefiting from rising copper production, driven by strong operational performance across its assets. However, weather-related disruptions earlier in 2025 affected Rio Tinto’s iron ore volumes. Planned maintenance activities at some copper mining projects temporarily reduced Rio Tinto’s output in 2025, while cost pressures from inflation and higher sustaining capital spending impacted margins.
USAR’s Price Performance, Valuation & Estimates
Shares of USAR have gained 232.9% in the past year compared with the industry’s growth of 55.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, USAR is trading at a forward price-to-earnings ratio of negative 85.07X against the industry’s average of 15.76X. USA Rare Earth has a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for USAR’s 2026 earnings has decreased over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.