Foraco International (FAR) AI Stock Analysis

• Market Cap: C$294.59M
• Dividend Yield: N/A
• Average Volume (3M): 214.80K
• Price to Earnings (P/E): 10.9
• Beta (1Y): 1.61
• 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: -0.25
• Price to Book (P/B): 1.75
• Price to Sales (P/S): 0.66
• P/FCF Ratio: 106.16
• 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: 61 Neutral
• Price Target: C$3.50 ▲(40.00% Upside)
• Action: Downgraded Date: 03/05/26
• Date: Action: Downgraded 03/05/26

The score is held back primarily by weakening financial performance—declining revenue, compressed margins, and especially sharply reduced free cash flow alongside still-meaningful leverage. This is partially offset by supportive technical momentum and a moderately attractive P/E, plus a constructive earnings-call outlook highlighted by a record backlog and improving utilization despite near-term cost and margin headwinds.

Positive Factors

Record backlog and booked revenue visibility

A $404M backlog with $228M slated for 2026 provides durable revenue visibility across the next 12–18 months, reducing near-term demand volatility. High-quality contracted work supports steadier utilization, predictable cashflows from executed contracts, and underpins execution plans and deleveraging efforts.

Strategic mix toward gold and Tier‑1 clients

Higher exposure to gold and Tier‑1 miners strengthens revenue quality: funded exploration/development programs for gold are typically more resilient and better financed. Tier‑1 relationships lower counterparty risk and increase probability of repeat, multi-year contracts, improving long-term contract stability and pricing leverage.

Improving utilization and invested capacity

Rising utilization combined with targeted CapEx (proprietary rigs) meaningfully raises operating leverage potential. Moving toward ~67% fleet use allows fixed-cost absorption, improving margins over time. Investment in rigs supports scalable deployment and reduces reliance on third-party capacity constraints.

Negative Factors

Revenue and margin deterioration

A multi-year decline in top line and a persistent margin squeeze indicate structural pressures on pricing, mix and/or cost control. Lower revenue and compressed margins reduce internal funding for reinvestment, increase earnings volatility, and make meeting debt and capex commitments harder if demand softens.

Very weak free cash flow and cash quality

A sharp collapse in free cash flow impairs the company's ability to self‑fund growth, service debt, and accumulate liquidity. Low FCF relative to earnings implies working capital strain or heavy reinvestment, raising funding risk and making the company more sensitive to cost inflation or project delays over the medium term.

Meaningful leverage and rising net debt

Leverage near 1.0 and rising net debt constrain financial flexibility, increase interest and covenant exposure, and limit capital allocation options. In a downcycle, elevated leverage raises refinancing and liquidity risk and makes deleveraging a necessary priority, potentially crowding out growth investments.

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

Profitability remains positive (EBIT margin ~10% in 2025) and equity has rebuilt, but the overall financial profile has weakened since 2023: revenue declined in 2024 and again in 2025, margins compressed (gross ~17% in 2025 vs ~25% in 2023), leverage is still meaningful (debt-to-equity ~1.0), and free cash flow fell sharply to ~1.6M (~7% of net income), raising cash-quality and funding-risk concerns.

Income Statement

Performance has softened meaningfully versus prior years. Annual revenue declined in 2024 (down ~21%) and was followed by a further step-down in 2025 to ~263M, with profitability compressing sharply (gross margin ~17% in 2025 vs ~25% in 2023; net margin ~6% in 2025 vs ~9% in 2024). The main strength is that the business remains profitable with solid operating margins for the sector (EBIT margin ~10% in 2025), but the trajectory since 2023 points to weaker pricing/mix and/or cost pressure, increasing earnings volatility risk.

Balance Sheet

Leverage looks improved versus 2020, when debt was extremely high relative to equity, and equity has rebuilt materially (equity ~98.6M in 2025). That said, debt remains roughly in line with equity (debt-to-equity ~1.0 in 2025) and was higher than 1.0 in 2021–2024, which keeps financial flexibility somewhat constrained if the downcycle persists. Total assets increased in 2025, but the capital structure still reflects a meaningful reliance on debt.

Cash Flow

Cash generation weakened materially in 2025. Operating cash flow was positive (~24.8M), but free cash flow fell to ~1.6M (down ~87% year over year), and free cash flow was very low relative to net income (~7%), indicating heavy reinvestment and/or working-capital drag. Prior years were stronger (notably 2022–2023), but the 2025 drop raises near-term quality-of-earnings and funding-risk concerns if elevated spending continues.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	262.71M	293.45M	370.09M	330.56M	269.69M
Gross Profit	44.58M	63.06M	93.86M	71.27M	46.82M
EBITDA	45.54M	59.91M	86.30M	67.08M	77.63M
Net Income	15.84M	27.81M	28.71M	19.76M	35.49M
Balance Sheet
Total Assets	252.46M	226.02M	279.73M	249.54M	228.79M
Cash, Cash Equivalents and Short-Term Investments	27.25M	24.36M	34.29M	29.41M	23.92M
Total Debt	98.18M	85.31M	99.49M	105.57M	109.66M
Total Liabilities	148.83M	142.71M	181.67M	174.05M	166.26M
Stockholders Equity	98.60M	77.50M	85.92M	65.19M	55.98M
Cash Flow
Free Cash Flow	1.62M	10.36M	29.08M	17.39M	10.43M
Operating Cash Flow	24.76M	29.23M	55.22M	37.43M	29.02M
Investing Cash Flow	-23.14M	-18.87M	-26.14M	-20.04M	-18.59M
Financing Cash Flow	324.58K	-18.75M	-23.94M	-10.68M	-7.80M

Foraco International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 3.11, below the 50-day MA of 2.83, and above the 200-day MA of 2.21, indicating a neutral trend. The MACD of 0.10 indicates Positive momentum. The RSI at 46.70 is Neutral, neither overbought nor oversold. The STOCH value of 16.27 is Positive, 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
OGD	64 Neutral	C$85.44M	10.45	7.13%	―	1.04%	107.55%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
FAR	61 Neutral	C$294.59M	10.86	18.35%	―	-17.73%	-36.29%
DBG	57 Neutral	C$563.78M	-107.42	-5.12%	―	―	47.32%
GEO	57 Neutral	C$156.91M	-91.55	7.68%	―	25.76%	15.68%
AGX	50 Neutral	C$272.82M	-59.63	-6.09%	―	8.28%	87.46%
CNC	46 Neutral	C$420.07M	-8.96	-7.85%	―	―	-51.28%

Foraco International Corporate Events

Foraco posts modest Q4 gains and record backlog as 2025 transition year sets stage for 2026 growth

Foraco International reported modest fourth-quarter 2025 growth with revenue rising 4% year-on-year to US$63.1 million and net profit up 10% to US$2.3 million, driven largely by strong activity in South America despite seasonal weakness in North America and Asia-Pacific. Profitability metrics such as gross margin and EBITDA margin eased slightly due to the ramp-up of new contracts, but rig utilization improved to 40%, signalling better asset deployment and underlying operational momentum.

For the full year 2025, revenue declined to US$258.2 million from US$293.5 million as the company underwent a transition focused on strengthening commercial activity, relocating assets and building out management and regional platforms, particularly in the Americas. The standout development was a record order backlog of US$404.4 million, up 83% year-on-year, with US$228.5 million slated for execution in 2026, underpinning strong revenue visibility, improved cash conversion prospects and a solid balance sheet supported by strict cost control and stable working capital.

Management highlighted that most major mobilizations tied to new long-term contracts are now complete, positioning Foraco for a progressive recovery in performance from 2026 onward. The company also emphasized disciplined capital expenditure and secured financing lines to support growth, suggesting enhanced resilience and a stronger competitive position in the global drilling services market going into the next fiscal year.

The most recent analyst rating on (TSE:FAR) stock is a Buy with a C$3.50 price target. To see the full list of analyst forecasts on Foraco International stock, see the TSE:FAR Stock Forecast page.

Foraco Sets Date for Q4 2025 Results and Investor Call

Foraco International SA will release its fourth-quarter 2025 financial results before the Toronto Stock Exchange opens on March 2, 2026, and management will host a conference call the same day to review the figures. The scheduled disclosure underlines the company’s ongoing communication with investors and analysts, offering stakeholders a key update on operational and financial performance as the global mineral drilling market continues to evolve.

The conference call, led by chief executive Tim Bremner and chief financial officer Fabien Sevestre, will be accessible via telephone and live webcast, with an archived replay available for 90 days. This broad access aims to ensure transparency and engagement across Foraco’s international stakeholder base, potentially shaping market perceptions of its growth trajectory and positioning within the mineral drilling services industry.

The most recent analyst rating on (TSE:FAR) stock is a Buy with a C$3.50 price target. To see the full list of analyst forecasts on Foraco International stock, see the TSE:FAR Stock Forecast page.

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.