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We feel now is a pretty good time to analyse Trican Well Service Ltd.'s (TSE:TCW) business as it appears the company may be on the cusp of a considerable accomplishment. Trican Well Service Ltd., an equipment services company, provides various specialized products, equipment, services, and technology for use in the drilling, completion, stimulation, and reworking of oil and gas wells primarily in Canada. On 31 December 2020, the CA$553m market-cap company posted a loss of CA$233m for its most recent financial year. As path to profitability is the topic on Trican Well Service'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.
According to the 9 industry analysts covering Trican Well Service, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$41m in 2023. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 113%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Trican Well Service's upcoming projects, though, bear in mind that by and large energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Trican Well Service currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of Trican Well Service 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 Trican Well Service, take a look at Trican Well Service's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
Valuation: What is Trican Well Service 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 Trican Well Service 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 Trican Well Service’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.
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.
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