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When Can We Expect A Profit From Frank's International N.V. (NYSE:FI)?

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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$1.4b market-cap company announced a latest loss of -US$90.7m on 31 December 2018 for its most recent financial year result. The most pressing concern for investors is FI’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for FI.

See our latest analysis for Frank's International

According to the 10 industry analysts covering FI, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$43m in 2021. So, FI is predicted to breakeven approximately 2 years 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 73%, which is extremely buoyant. If this rate turns out to be too aggressive, FI may become profitable much later than analysts predict.

NYSE:FI Past and Future Earnings, March 27th 2019
NYSE:FI Past and Future Earnings, March 27th 2019

I’m not going to go through company-specific developments for FI given that this is a high-level summary, however, keep in mind that typically an oil and gas 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 0.5% 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:

This article is not intended to be a comprehensive analysis on FI, so if you are interested in understanding the company at a deeper level, take a look at FI’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:

  1. Historical Track Record: What has FI's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.