Stock Analysis

When Will Trican Well Service Ltd. (TSE:TCW) Turn A Profit?

TSX:TCW
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Trican Well Service Ltd. (TSE:TCW) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Trican Well Service Ltd., an equipment services company, provides various specialized products, equipment, services, and technology for use in the drilling, completion, stimulation, and reworking of oil and gas wells primarily in Canada. The CA$561m market-cap company announced a latest loss of CA$233m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Trican Well Service'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 Trican Well Service

According to the 9 industry analysts covering Trican Well Service, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$11m in 2022. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 119%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
TSX:TCW Earnings Per Share Growth May 12th 2021

We're not going to go through company-specific developments for Trican Well Service given that this is a high-level summary, however, keep in mind that typically an energy business has lumpy cash flows which are contingent on the natural resource 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 Trican Well Service has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Trican Well Service to cover in one brief article, but the key fundamentals for the company can all be found in one place – Trican Well Service's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

  1. Valuation: What is Trican Well Service 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 Trican Well Service 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 Trican Well Service’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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Valuation is complex, but we're helping make it simple.

Find out whether Trican Well Service is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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