Analysts Are Optimistic We'll See A Profit From GFL Environmental Inc. (TSE:GFL)

GFL Environmental Inc. (TSE:GFL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. GFL Environmental Inc. offers non-hazardous solid waste management and environmental services in Canada and the United States. The CA$16b market-cap company’s loss lessened since it announced a CA$267m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$213m, as it approaches breakeven. As path to profitability is the topic on GFL Environmental's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for GFL Environmental

According to the 17 industry analysts covering GFL Environmental, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of CA$64m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 118% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of GFL Environmental's upcoming projects, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. GFL Environmental currently has a debt-to-equity ratio of 118%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of GFL Environmental 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 GFL Environmental, take a look at GFL Environmental's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

1. Valuation: What is GFL Environmental 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 GFL Environmental is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on GFL Environmental’s board and the CEO’s background.
3. 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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 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.