GFL Environmental Inc. (TSE:GFL) Has Found A Path To Profitability
We feel now is a pretty good time to analyse GFL Environmental Inc.'s (TSE:GFL) business as it appears the company may be on the cusp of a considerable accomplishment. GFL Environmental Inc. offers non-hazardous solid waste management and environmental services in Canada and the United States. The CA$19b market-cap company posted a loss in its most recent financial year of CA$267m and a latest trailing-twelve-month loss of CA$213m shrinking the gap between loss and breakeven. The most pressing concern for investors is GFL Environmental's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for GFL Environmental
According to the 18 industry analysts covering GFL Environmental, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of CA$57m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 104% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for GFL Environmental given that this is a high-level summary, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with GFL Environmental is its debt-to-equity ratio of 118%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on GFL Environmental, so if you are interested in understanding the company at a deeper level, take a look at GFL Environmental's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
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.
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.
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.
