Frank's International N.V. (NYSE:FI): Are Analysts Optimistic?

Frank's International N.V.'s (NYSE:FI): Frank's International N.V. provides various engineered tubular services for the oil and gas exploration and production, and oilfield services companies in the United States, Europe, the Middle East, Africa, Latin America, the Asia Pacific, and internationally. The US$810m market-cap posted a loss in its most recent financial year of -US$90.7m and a latest trailing-twelve-month loss of -US$83.1m shrinking the gap between loss and breakeven. The most pressing concern for investors is FI’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for FI’s growth and when analysts expect the company to become profitable.

View our latest analysis for Frank's International

FI is bordering on breakeven, according to the 7 Energy Services analysts. They expect the company to post a final loss in 2019, before turning a profit of US$3.0m in 2020. Therefore, FI is expected to breakeven roughly a few months from now. What rate will FI have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 104%, which is extremely buoyant. If this rate turns out to be too aggressive, FI may become profitable much later than analysts predict.

I’m not going to go through company-specific developments for FI given that this is a high-level summary, though, keep in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that FI has managed its capital prudently, with debt making up 0.05% of equity. This means that FI 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 FI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at FI, take a look at FI’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:

1. Valuation: What is FI 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 FI 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 Frank's International’s board and the CEO’s back ground.
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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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