Foraco International (FAR) AI Stock Analysis

• Market Cap: C$332.03M
• Dividend Yield: N/A
• Average Volume (3M): 214.80K
• Price to Earnings (P/E): 14.3
• Beta (1Y): 1.52
• Revenue Growth: -17.73%
• EPS Growth: -36.29%
• Country: CA
• Employees: 1,950
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Industrial Materials
• EPS (TTM): 0.03
• Shares Outstanding: 98,525,000
• 10 Day Avg. Volume: 163,142
• 30 Day Avg. Volume: 214,804
• PEG Ratio: -1.72
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 0.56
• P/FCF Ratio: 15.96
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$4.50
• Price Target Upside: 80.00% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): 0.27
• Revenue Forecast (FY): C$302.30M

• Rating: 70 Outperform
• Price Target: C$3.50 ▲(40.00% Upside)
• Action: Reiterated Date: 12/19/25
• Date: Action: Reiterated 12/19/25

Foraco International's overall stock score reflects a balanced view of its financial performance, technical analysis, and valuation. The company's strong cash flow and return on equity are positive, but high leverage and declining margins pose risks. Technical indicators are favorable, suggesting bullish momentum. The valuation is reasonable, though the lack of a dividend yield may deter some investors. The earnings call provided mixed insights, with notable contract wins but also challenges in revenue and margin declines.

Positive Factors

Free cash flow growth

Sustained free cash flow growth (17.37% TTM, FCF/net income ~0.41) strengthens internal funding for rig investments and maintenance, reduces reliance on external equity, and supports debt servicing and disciplined capital allocation across cyclical mining cycles over the medium term.

High return on equity

A 22.5% ROE signals effective capital deployment by management in a capital-intensive drilling business, implying productive operations and pricing/execution that generate attractive shareholder returns and provide scope to reinvest in fleet and technology for durable competitive positioning.

Secured long-term contracts and regional ramps

Winning and renewing $150M of multi-year contracts and seeing 25%/32% growth in South America/EMEA improves revenue visibility and utilization, diversifies geographic exposure, and underpins multi-period cash generation and fleet deployment planning amid recovery in mining financings.

Negative Factors

High leverage

A D/E ~1.06 and rising net debt reduce financial flexibility in a cyclical sector, increasing interest obligations and constraint on incremental capex. In downturns this leverage amplifies earnings volatility and limits ability to pursue opportunistic investments without raising costly capital.

Declining margins and EBITDA

Compressing gross margin and lower EBITDA indicate margin pressure from pricing or cost inflation. Persistent margin erosion undermines the company's ability to convert revenue into free cash and weakens buffer for servicing debt, investing in new rigs, and sustaining returns through cycles.

North America weakness & market competition

Heavy exposure to a competitive, price-driven Canadian market (29% YoY North America decline) raises structural revenue volatility risks. Dependence on mining activity plus regional competition limits pricing power and makes revenue recovery slower absent sustained commodity-driven capex from miners.

Foraco International Business Overview & Revenue Model

Company Description

Foraco International SA, together with its subsidiaries, provides drilling services worldwide. It operates through two segments: Mining and Water. The company offers its drilling services to the mining and energy industry, such as exploration, development, and production related underground water drilling services. It also drills wells for drinking, irrigation, industrial water, and dewatering wells; and undertakes a range of projects, including village water drilling programs, specialized drilling projects to access mineral water using sanitary protection methods, and large diameter well fields for residential supply in urban environments, as well as provides inspection, servicing, and rehabilitation services for existing wells. As of December 31, 2021, the company operated 302 drill rigs, including 62 rotary drilling rigs, 190 core diamond drilling rigs, 18 combination rigs, and 32 underground rigs. It serves mining companies, governmental organizations, and international development funds. The company was founded in 1961 and is headquartered in Marseille, France.

How the Company Makes Money

Foraco International generates revenue primarily through its drilling operations, providing services to mining and exploration companies. Key revenue streams include contracts for drilling services, where clients pay for both the drilling work and associated logistics. The company also earns income from long-term contracts and project-based engagements. Significant partnerships with mining companies and government contracts in mineral-rich regions further bolster its earnings. Additionally, Foraco's focus on operational efficiency and technological innovation helps to optimize costs and improve profit margins, contributing positively to its overall financial performance.

Foraco International Financial Statement Overview

Summary

Foraco International demonstrates a mixed financial performance. The income statement shows moderate revenue growth but declining margins, indicating pressure on profitability. The balance sheet highlights high leverage, posing potential risks, although return on equity remains strong. Cash flow is a positive aspect, with growth in free cash flow and adequate cash generation relative to net income. Overall, while there are strengths in cash flow and equity returns, the company faces challenges with profitability and leverage.

Income Statement

Foraco International shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) data indicates a gross profit margin of 19.11% and a net profit margin of 7.27%, both of which are slightly below industry averages. Revenue growth is positive at 7.68%, indicating a recovery from the previous year's decline. However, margins have decreased compared to previous years, suggesting pressure on profitability.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 1.06, indicating significant leverage, which poses a risk in volatile markets. Return on equity is strong at 22.50%, reflecting efficient use of equity. However, the equity ratio is low, suggesting a reliance on debt financing. Overall, the balance sheet shows potential risks due to high leverage.

Cash Flow

Cash flow analysis shows a positive trend with a free cash flow growth rate of 17.37% in the TTM period. The operating cash flow to net income ratio is 0.37, indicating decent cash generation relative to net income. The free cash flow to net income ratio of 0.41 suggests that the company is generating adequate free cash flow to support its net income, although there is room for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	255.03M	293.45M	370.09M	330.56M	269.69M	207.12M
Gross Profit	46.06M	63.06M	93.86M	71.27M	46.82M	38.23M
EBITDA	44.81M	59.91M	86.30M	67.08M	77.63M	35.24M
Net Income	16.68M	27.81M	28.71M	19.76M	35.49M	7.66M
Balance Sheet
Total Assets	257.51M	226.02M	279.73M	249.54M	228.79M	227.76M
Cash, Cash Equivalents and Short-Term Investments	24.88M	24.36M	34.29M	29.41M	23.92M	20.96M
Total Debt	96.92M	85.31M	99.49M	105.57M	109.66M	162.61M
Total Liabilities	155.04M	142.71M	181.67M	174.05M	166.26M	209.96M
Stockholders Equity	97.45M	77.50M	85.92M	65.19M	55.98M	12.93M
Cash Flow
Free Cash Flow	12.61M	10.36M	29.08M	17.39M	10.43M	17.20M
Operating Cash Flow	32.26M	29.23M	55.22M	37.43M	29.02M	30.52M
Investing Cash Flow	-19.65M	-18.87M	-26.14M	-20.04M	-18.59M	-13.32M
Financing Cash Flow	-9.71M	-18.75M	-23.94M	-10.68M	-7.80M	-11.94M

Foraco International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 2.5 is below the 20-day moving average (MA) of 3.07, below the 50-day MA of 2.78, and above the 200-day MA of 2.19, indicating a bullish trend. The MACD of 0.17 indicates Negative momentum. The RSI at 71.22 is Negative, neither overbought nor oversold. The STOCH value of 86.61 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FAR	70 Outperform	C$332.03M	14.27	18.35%	―	-17.73%	-36.29%
GEO	69 Neutral	C$171.99M	13.09	7.68%	―	25.76%	15.68%
OGD	64 Neutral	C$90.00M	20.02	7.13%	―	1.04%	107.55%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
DBG	56 Neutral	C$631.44M	-285.71	-5.12%	―	―	47.32%
AGX	50 Neutral	C$340.98M	-109.09	-6.09%	―	8.28%	87.46%
CNC	46 Neutral	C$475.28M	-14.80	-7.85%	―	―	-51.28%

Foraco International Corporate Events

Foraco International Secures $60M Drilling Contracts with Tier-One Gold Producers

Foraco International has secured over US$60 million in long-term drilling contracts with Tier-One gold producers in Nevada, USA. This strategic move enhances Foraco’s presence in the U.S. market and showcases its technical expertise in handling challenging geological conditions, reinforcing its commitment to long-term partnerships in the mining industry.

The most recent analyst rating on (TSE:FAR) stock is a Hold with a C$2.50 price target. To see the full list of analyst forecasts on Foraco International stock, see the TSE:FAR Stock Forecast page.