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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$16b market-cap company posted a loss in its most recent financial year of CA$267m and a latest trailing-twelve-month loss of CA$416m 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. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for GFL Environmental
GFL Environmental is bordering on breakeven, according to the 12 Canadian Commercial Services analysts. They expect the company to post a final loss in 2022, before turning a profit of CA$60m in 2023. So, the company is predicted to breakeven approximately 12 months 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 120% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for GFL Environmental given that this is a high-level summary, however, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with GFL Environmental is its debt-to-equity ratio of 111%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 relevant factors you should look at:
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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.
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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.
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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.