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Foraco International
(TSX:FAR)
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Rating:55Neutral
Price Target:
C$3.00
▲(3.81% Upside)
Action:Reiterated
Date:08/03/26
The score is held back primarily by weakened cash generation (negative TTM free cash flow) and a technically weak price trend (below major moving averages). Offsetting factors include a moderate valuation (P/E ~13) and a generally positive earnings call outlook driven by a record order book and improving utilization, though margin compression and higher net debt remain important risks.
Positive Factors
Order Book Visibility
A record $404M backlog gives durable revenue visibility over the next several quarters, reducing near-term sales risk and allowing the company to schedule rigs and crews efficiently. This backlog supports predictable utilization and revenue scaling without relying on immediate new wins.
Negative Factors
Weak Cash Generation
Negative free cash flow after recent investments and working-capital build reduces internal funding for operations and growth. Reliance on external financing or credit lines raises refinancing and liquidity risk, limiting flexibility to invest opportunistically or absorb prolonged industry downturns.
Read all positive and negative factors
Positive Factors
Negative Factors
Order Book Visibility
A record $404M backlog gives durable revenue visibility over the next several quarters, reducing near-term sales risk and allowing the company to schedule rigs and crews efficiently. This backlog supports predictable utilization and revenue scaling without relying on immediate new wins.
Read all positive factors
Foraco International (FAR) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$282.79M
Dividend YieldN/A
Average Volume (3M)214.80K
Price to Earnings (P/E)16.2
Beta (1Y)1.86
Revenue Growth7.69%
EPS Growth-34.65%
CountryCA
Employees2,139
SectorBasic Materials
Sector Strength58
IndustryEngineering & Construction
Share Statistics
EPS (TTM)0.13
Shares Outstanding97,851,600
10 Day Avg. Volume163,142
30 Day Avg. Volume214,804
Financial Highlights & Ratios
PEG Ratio-0.25
Price to Book (P/B)1.75
Price to Sales (P/S)0.66
P/FCF Ratio106.16
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.17
Revenue Forecast (FY)C$308.05M
Foraco International Business Overview & Revenue Model
Company Description
Foraco International SA is a global mineral drilling services company. It operates through the Mining and Water segments. The Mining segment deals in drilling services offered to the mining and energy industry during the exploration, development, ...
How the Company Makes Money
Foraco makes money by contracting with mining and resource companies to provide drilling services on a fee-for-service basis. Its core revenue stream comes from executing drilling programs—typically billed using contract structures tied to measura...
Foraco International Earnings Call Summary
Earnings Call Date:Jul 31, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Neutral
The call reflected strong top-line momentum driven by higher utilization, broad geographic growth (notably North America and South America), a record order book and strategic investments in rigs, which support visibility into H2 2026. However, profitability and cash metrics were pressured by significant input cost inflation, mobilization/start-up inefficiencies and higher working capital that led to compressed gross and EBITDA margins and higher net debt and negative YTD free cash flow. Management emphasized ongoing pricing actions, margin recovery and the expectation that seasonal working capital and earlier investments will reverse in H2.Positive Updates
Strong Revenue Growth
Revenue increased 22% year-over-year to $84.5 million in Q2 2026 (Q2 2025: $69.1 million), the strongest quarterly revenue since Q2 2023.
Negative Updates
Gross Margin Compression
Gross margin fell to 15.5% in Q2 2026 from 20.5% in Q2 2025, driven by higher labor and consumable costs, mobilization expense and lower operating efficiency during start-ups.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Revenue Growth
Revenue increased 22% year-over-year to $84.5 million in Q2 2026 (Q2 2025: $69.1 million), the strongest quarterly revenue since Q2 2023.
Read all positive updates
Company Guidance
Management said the company enters H2 2026 with strong visibility from a record $404M order book (≈$230M originally earmarked for 2026) and reiterated guidance that revenue momentum should continue after Q2 revenue of $84.5M (+22% y/y; H1 $161M, +22% y/y) and a rig utilization lift to 51% (from 35% prior year) that leaves meaningful spare capacity; Q2 EBITDA was $15M (17.8% of revenue) versus $14M (20.3%) a year ago, gross margin 15.5% (vs 20.5% prior), YTD gross margin 13% (vs 18%), YTD EBIT $10M (vs $12M), and YTD EBITDA 15% (vs 17%). Management is prioritizing margin recovery via progressive double‑digit pricing adjustments to offset cost inflation (labor +10–15%+ in some regions; drilling consumables up materially), improved project execution and further utilization gains with the aim of returning toward 2023–24 margin levels. On cash and capital, H1 capex was $16M (six new rigs; ~$8M of that tied to H2 contract performance), Q2 free cash flow was $7M (H1 FCF -$13M), working capital increased to ~$15M (seasonal ~$14M expected to reverse in H2), net debt rose to $85.7M but is expected to be reduced before year‑end, and $22M of committed credit lines remain undrawn. Management also noted a target payback on expansionary rigs of under 2 years (ideally ~18 months).Foraco International Financial Statement Overview
Summary
Income Statement
66
Positive
Balance Sheet
62
Positive
Cash Flow
44
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 284.97M | 262.71M | 293.45M | 370.09M | 330.56M | 269.69M |
| Gross Profit | 42.81M | 44.58M | 63.06M | 93.86M | 71.27M | 46.82M |
| EBITDA | 46.38M | 45.54M | 59.91M | 86.30M | 67.08M | 77.63M |
| Net Income | 12.39M | 15.84M | 27.81M | 28.71M | 19.76M | 35.49M |
Balance Sheet | ||||||
| Total Assets | 278.14M | 252.46M | 226.02M | 279.73M | 249.54M | 228.79M |
| Cash, Cash Equivalents and Short-Term Investments | 17.29M | 27.25M | 24.36M | 34.29M | 29.41M | 23.92M |
| Total Debt | 102.97M | 98.18M | 85.31M | 99.49M | 105.57M | 109.66M |
| Total Liabilities | 171.44M | 148.83M | 142.71M | 181.67M | 174.05M | 166.26M |
| Stockholders Equity | 101.98M | 98.60M | 77.50M | 85.92M | 65.19M | 55.98M |
Cash Flow | ||||||
| Free Cash Flow | -4.16M | 1.62M | 10.36M | 29.08M | 17.39M | 10.43M |
| Operating Cash Flow | 25.76M | 24.76M | 29.23M | 55.22M | 37.43M | 29.02M |
| Investing Cash Flow | -29.92M | -23.14M | -18.87M | -26.14M | -20.04M | -18.59M |
| Financing Cash Flow | 1.05M | 324.58K | -18.75M | -23.94M | -10.68M | -7.80M |
Foraco International Technical Analysis
Positive
2.89
Price Trends
2.69
Positive
2.79
Positive
2.69
Positive
Market Momentum
0.02
Negative
61.79
Neutral
94.84
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FAR, the sentiment is Positive. The current price of 2.89 is above the 20-day moving average (MA) of 2.50, above the 50-day MA of 2.69, and above the 200-day MA of 2.69, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 61.79 is Neutral, neither overbought nor oversold. The STOCH value of 94.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:FAR.
Foraco International Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
55 Neutral | C$282.79M | 16.21 | 15.14% | ― | 7.69% | -34.65% | |
54 Neutral | C$115.93M | -11.82 | -5.96% | ― | 12.59% | -194.85% | |
50 Neutral | C$413.39M | -14.11 | -10.81% | ― | ― | -65.13% | |
48 Neutral | C$51.15M | 94.37 | 0.85% | ― | 3.14% | -90.42% | |
48 Neutral | C$269.63M | 62.43 | 0.06% | ― | 108.81% | ― | |
46 Neutral | C$473.20M | -64.63 | -19.18% | ― | ― | -240.00% |
* Basic Materials Sector Average
TSE:FAR
Foraco International
2.92
1.04
55.32%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.