Stock Analysis

Major Drilling Group International Inc. (TSE:MDI) On The Verge Of Breaking Even

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TSX:MDI
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With the business potentially at an important milestone, we thought we'd take a closer look at Major Drilling Group International Inc.'s (TSE:MDI) future prospects. 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$614m market-cap company posted a loss in its most recent financial year of CA$71m and a latest trailing-twelve-month loss of CA$75m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Major Drilling Group International will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Major Drilling Group International

According to the 6 industry analysts covering Major Drilling Group International, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$22m in 2021. So, the company is predicted to breakeven approximately a year 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 146% is expected, 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:MDI Earnings Per Share Growth January 13th 2021

Underlying developments driving Major Drilling Group International's growth isn’t the focus of this broad overview, however, keep in mind that typically 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 prudently, with debt making up 5.4% 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 too many aspects of Major Drilling Group International to cover in one brief article, but the key fundamentals for the company can all be found in one place – Major Drilling Group International's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

  1. 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.
  2. 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.
  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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