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 Canada and the United States. With the latest financial year loss of CA$660m and a trailing-twelve-month loss of CA$225m, the CA$12b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on GFL Environmental's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 12 industry analysts covering GFL Environmental, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of CA$12m in 2022. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 50% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving GFL Environmental's growth isn’t the focus of this broad overview, though, bear in mind that generally 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 144%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
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 compiled a list of important factors you should further research:
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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