Yahoo Finance Major Drilling Group International Inc. (TSE:MDI) Could Be Less Than A Year Away From Profitability
We feel now is a pretty good time to analyse Major Drilling Group International Inc.'s (TSE:MDI) business as it appears the company may be on the cusp of a considerable accomplishment. Major Drilling Group International Inc. provides contract drilling services for mining and mineral exploration companies in Canada, the United States, Mexico, South America, Asia, Africa, and Europe. The CA$546m market-cap company’s loss lessened since it announced a CA$71m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$67m, as it approaches breakeven. As path to profitability is the topic on Major Drilling Group International's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Major Drilling Group International
Consensus from 6 of the Canadian Metals and Mining analysts is that Major Drilling Group International is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CA$15m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 96%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Major Drilling Group International's growth isn’t the focus of this broad overview, though, bear 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.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 5.5% 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 key fundamentals of Major Drilling Group International which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Major Drilling Group International, take a look at Major Drilling Group International's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:
Valuation: What is Major Drilling Group International 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 Major Drilling Group International 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 Major Drilling Group International’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.
This article by Simply Wall St is general in nature. 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.
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