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Loss-Making GFL Environmental Inc. (TSE:GFL) Expected To Breakeven In The Medium-Term

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Simply Wall St
·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at GFL Environmental Inc.'s (TSE:GFL) future prospects. GFL Environmental Inc. operates as a diversified environmental services company in North America. The CA$13b market-cap company posted a loss in its most recent financial year of CA$452m and a latest trailing-twelve-month loss of CA$689m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on GFL Environmental's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for GFL Environmental

According to the 10 industry analysts covering GFL Environmental, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$134m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 75% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of GFL Environmental's upcoming projects, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. GFL Environmental currently has a debt-to-equity ratio of 110%. 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 in investing in the loss-making company.

Next Steps:

There are key fundamentals of GFL Environmental which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at GFL Environmental, take a look at GFL Environmental's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

  1. 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.

  2. 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.

  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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.