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USA Rare Earth, Inc. (USAR - Free Report) is still in the early phases of commercialization and continues to incur losses as it scales its operations. Though the company started generating revenues following the acquisition of Less Common Metals, higher operating expenses related to expansion, acquisitions and workforce growth are pressuring its profitability.
USAR’s cost of product revenues was $5.59 million in the first quarter of 2026. The figure 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 owing to increasing legal & consulting costs, higher headcount & recruiting fees and other costs.
USAR’s research and development expenses climbed to $14.2 million compared with $1.7 million reported in the year-ago quarter due to higher employee-related and development costs. Consequently, the company posted a loss of 34 cents per share for the quarter.
However, USAR recently reached a significant milestone by commissioning Phase 1a of its commercial magnet production line at its Stillwater, OK, facility. This enables USAR to start fulfilling customer orders for sintered neodymium-iron-boron (NdFeB) permanent magnets in the second quarter of 2026.
While USA Rare Earth is making steady progress in expanding its operations, continued losses and cost pressures remain challenges. The company’s ability to balance growth investments with improving revenues and cost discipline is expected to benefit it in the quarters ahead.
USAR’s Peer Performance
Among its major peers, NioCorp Developments Ltd. (NB - Free Report) is experiencing rising cost pressures. In the third quarter of fiscal 2026, Niocorp reported a significant year-over-year increase in operating expenses, primarily driven by spending related to the advancement of the Elk Creek Project. If these elevated costs persist, they could weigh on NioCorp’s margins and profitability.
Its another peer, Rio Tinto Group (RIO - Free Report) , is gaining from rising copper production, driven by strong operational performance across its assets. However, weather-related disruptions 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 85.8% in the past year compared with the industry’s growth of 58.1%.
Image Source: Zacks Investment Research
From a valuation standpoint, USAR is trading at a forward price-to-earnings ratio of negative 70.07X against the industry’s average of 15.85X. 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
Will High Operating Expenses Hinder USAR's Growth Potential?
Key Takeaways
USA Rare Earth, Inc. (USAR - Free Report) is still in the early phases of commercialization and continues to incur losses as it scales its operations. Though the company started generating revenues following the acquisition of Less Common Metals, higher operating expenses related to expansion, acquisitions and workforce growth are pressuring its profitability.
USAR’s cost of product revenues was $5.59 million in the first quarter of 2026. The figure 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 owing to increasing legal & consulting costs, higher headcount & recruiting fees and other costs.
USAR’s research and development expenses climbed to $14.2 million compared with $1.7 million reported in the year-ago quarter due to higher employee-related and development costs. Consequently, the company posted a loss of 34 cents per share for the quarter.
However, USAR recently reached a significant milestone by commissioning Phase 1a of its commercial magnet production line at its Stillwater, OK, facility. This enables USAR to start fulfilling customer orders for sintered neodymium-iron-boron (NdFeB) permanent magnets in the second quarter of 2026.
While USA Rare Earth is making steady progress in expanding its operations, continued losses and cost pressures remain challenges. The company’s ability to balance growth investments with improving revenues and cost discipline is expected to benefit it in the quarters ahead.
USAR’s Peer Performance
Among its major peers, NioCorp Developments Ltd. (NB - Free Report) is experiencing rising cost pressures. In the third quarter of fiscal 2026, Niocorp reported a significant year-over-year increase in operating expenses, primarily driven by spending related to the advancement of the Elk Creek Project. If these elevated costs persist, they could weigh on NioCorp’s margins and profitability.
Its another peer, Rio Tinto Group (RIO - Free Report) , is gaining from rising copper production, driven by strong operational performance across its assets. However, weather-related disruptions 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 85.8% in the past year compared with the industry’s growth of 58.1%.
Image Source: Zacks Investment Research
From a valuation standpoint, USAR is trading at a forward price-to-earnings ratio of negative 70.07X against the industry’s average of 15.85X. 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.