Major Drilling (MDI) AI Stock Analysis

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Major Drilling

(TSX:MDI)

61Neutral

Major Drilling's overall score reflects a solid financial foundation and a mixed outlook from the recent earnings call. While the company has shown strength in revenue growth and a robust balance sheet, technical indicators point to bearish trends, and challenges with decreased margins and profitability impact the outlook. Valuation is reasonable, but the absence of a dividend yield is a drawback for investors seeking income.

Major Drilling (MDI) vs. S&P 500 (SPY)

Market Cap

C$552.45M

Dividend YieldN/A

Average Volume (3M)230.81K

Price to Earnings (P/E)15.5

Beta (1Y)1.29

Revenue Growth-2.15%

EPS Growth-44.75%

CountryCA

Employees2,500

SectorBasic Materials

Sector Strength58

IndustryIndustrial Materials

Share Statistics

EPS (TTM)0.43

Shares Outstanding81,844,590

10 Day Avg. Volume281,003

30 Day Avg. Volume230,813

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.89

Price to Cash Flow (P/CF)5.40

P/FCF Ratio9.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$14.00

Price Target Upside112.44% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Major Drilling Business Overview & Revenue Model

Company DescriptionMajor Drilling Group International Inc. is a leading provider of specialized drilling services with operations spanning across various continents. The company primarily serves the mining industry, offering a range of services that include exploration, development, and production drilling. Major Drilling is renowned for its expertise in delivering complex and technically demanding projects, which has established it as a trusted partner for major mining companies worldwide.

How the Company Makes MoneyMajor Drilling generates revenue by providing specialized drilling services to the mining industry. The company's key revenue streams include contracts for exploration drilling, which involves identifying mineral deposits; development drilling, which assists in preparing mines for production; and production drilling, which supports the extraction of minerals. Major Drilling's earnings are heavily influenced by the global demand for minerals and metals, the exploration budgets of mining companies, and the company's ability to secure long-term contracts. Additionally, its strategic partnerships and advanced technological capabilities contribute significantly to its financial performance.

Major Drilling Financial Statement Overview

Summary

Major Drilling demonstrates stable financial performance with consistent revenue and profit generation. The balance sheet is strong, featuring low leverage and a high equity ratio, indicating financial health and low risk. Cash flow is solid but could improve in free cash flow conversion, indicating potential for better cash management. Overall, the company is well-positioned for steady growth with room for operational efficiency improvements.

Income Statement

Positive

Major Drilling has demonstrated stable revenue generation with a slight increase to $708 million in TTM compared to the previous year. Gross profit margin stands at 18.8%, indicating efficient cost management, though it has decreased from the prior year. The net profit margin at 4.9% reflects a solid bottom line despite a decline from the previous year. The company's EBITDA margin of 15.3% shows healthy cash earnings, but EBIT margin is relatively low at 5.4%, indicating potential operational efficiency issues. The revenue growth rate is modest, suggesting steady but not aggressive expansion.

Balance Sheet

Positive

The balance sheet is robust with a low debt-to-equity ratio of 0.07, indicating conservative leverage and strong equity backing. Return on equity at 6.5% reflects decent profitability for shareholders, though a slight decline from previous figures. The equity ratio is high at 74.5%, showcasing the company's significant equity financing, which is a sign of financial stability and low risk.

Cash Flow

Positive

Operating cash flow is strong at $105 million in TTM, supporting solid cash generation. However, free cash flow has decreased to $32 million from $39 million, signaling potential impacts from increased capital expenditures. The free cash flow to net income ratio is relatively low, suggesting that the company's ability to translate profits into free cash flow could be improved.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
708.07M	706.69M	735.74M	650.41M	432.08M	409.14M
	Gross Profit
132.91M	151.67M	176.90M	139.77M	64.09M	60.64M
	EBIT
38.02M	83.55M	98.59M	71.42M	12.89M	9.94M
	EBITDA
108.26M	125.22M	145.05M	114.09M	52.05M	-14.90M
	Net Income Common Stockholders
34.87M	53.09M	74.92M	53.46M	10.03M	-70.96M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
62.95M	96.22M	94.43M	71.26M	22.36M	58.43M
	Total Assets
722.17M	612.18M	611.68M	557.08M	388.53M	425.92M
	Total Debt
39.38M	4.72M	25.55M	55.39M	19.21M	55.18M
	Net Debt
-23.57M	-91.50M	-68.88M	-15.87M	-3.15M	-3.25M
	Total Liabilities
184.24M	118.35M	159.11M	197.32M	108.37M	128.87M
	Stockholders Equity
537.93M	493.83M	452.58M	359.76M	280.16M	297.05M
Cash Flow		Free Cash Flow
32.32M	38.50M	54.50M	44.93M	3.15M	10.07M
	Operating Cash Flow
104.69M	112.03M	113.19M	94.87M	34.45M	42.11M
	Investing Cash Flow
-178.51M	-78.39M	-63.98M	-85.84M	-29.38M	-44.73M
	Financing Cash Flow
27.49M	-32.52M	-29.61M	38.25M	-37.23M	32.64M

Major Drilling Technical Analysis

Technical Analysis Sentiment

Negative

Last Price6.59

Price Trends

50DMA

8.19

Negative

100DMA

8.37

Negative

200DMA

8.58

Negative

Market Momentum

MACD

-0.06

Negative

RSI

53.10

Neutral

STOCH

61.22

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MDI, the sentiment is Negative. The current price of 6.59 is below the 20-day moving average (MA) of 7.67, below the 50-day MA of 8.19, and below the 200-day MA of 8.58, indicating a bearish trend. The MACD of -0.06 indicates Negative momentum. The RSI at 53.10 is Neutral, neither overbought nor oversold. The STOCH value of 61.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:MDI.

Major Drilling Peers Comparison

Overall Rating

UnderperformOutperform

Sector (47)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCW	78 Outperform	C$761.02M	7.37	21.89%	4.69%	0.84%	-1.74%
SES	78 Outperform	C$2.92B	5.53	52.24%	3.17%	28.30%	227.26%
BTE	68 Neutral	C$1.80B	7.91	5.99%	4.01%	22.71%	―
PD	66 Neutral	$767.39M	7.34	6.90%	―	-1.83%	-62.53%
EFN	64 Neutral	$11.47B	21.71	13.51%	1.82%	23.55%	15.70%
MDI	61 Neutral	C$552.45M	15.47	6.87%	―	-2.15%	-44.75%
Sector *	47 Neutral	$2.32B	-2.83	-21.67%	3.65%	4.83%	-28.82%

* Basic Materials Sector Average

Performance Comparison

TSE:MDI

Major Drilling

6.59

-2.85

-30.19%

TSE:BTE

Baytex Energy

2.08

-3.13

-60.08%

TSE:PD

Precision Drilling

54.17

-49.00

-47.49%

TSE:TCW

Trican Well Service

3.84

-0.47

-10.97%

TSE:EFN

Element Fleet Management

26.96

5.59

26.16%

TSE:SES

Secure Energy Services

12.34

0.95

8.34%

Major Drilling Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: -15.30% | Next Earnings Date: Jun 5, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. While the acquisition of Explomin and record safety achievements were significant positives, the company faced challenges with decreased margins, a drop in revenue from juniors, and an increased net loss. The balance sheet remains strong and there is optimism for increased activity in 2025, driven by senior customer budgets. Overall, the sentiment leans towards cautious optimism.

Highlights

Successful Acquisition and Revenue Growth

Successfully completed the acquisition of Explomin, contributing to a 21% increase in revenue to $160.7 million from $132.8 million the previous year.

Record Safety Performance

Achieved the lowest total recordable injury frequency rate in the company's history at 0.38 and received the Safe Everyday Gold Award.

Strong Balance Sheet

Despite the largest acquisition in company history, ended the quarter with a net cash position of over $11 million.

Positive Outlook for 2025

Anticipated increase in activity and exploration budgets from senior gold and copper customers, with a high level of activity expected in 2025.

Increased Specialized Services Revenue

Specialized work accounted for 60% of total revenue, demonstrating high demand for specialized services.

Lowlights

Revenue Decline from Juniors

Revenue from junior customers dropped by 60%, with juniors only contributing 6% to total revenue due to limited exploration budgets.

Decreased Margins

Adjusted gross margin percentage decreased to 19.5% from 23.4% the previous year, impacted by reduced activity, retention of crews, and lower-margin Explomin operations.

Increased Net Loss

Reported a net loss of $9.1 million or $0.11 per share, compared to a net loss of $2.3 million or $0.03 per share the previous year.

Challenges in North America

Faced temporary setbacks in North America due to early project shutdowns and reduced activity from juniors.

Company Guidance

During the third quarter of fiscal 2025, Major Drilling reported a revenue increase of 21% year-over-year to $160.7 million, largely driven by the acquisition of Explomin. Despite a 60% drop in revenue from juniors, the company maintained overall stability through increased demand from senior customers and Explomin's senior-focused revenue. The total recordable injury frequency rate hit a company record low of 0.38, earning Major Drilling the Safe Everyday Gold Award. Geographically, Latin America and Australasia showed strong performance, while North America faced temporary setbacks due to early project shutdowns and reduced junior activity. The quarter's gross margin was 19.5%, down from 23.4% the previous year, affected by regional activity levels and maintenance programs. Major Drilling ended the quarter with a net cash position of over $11 million, having invested $12.6 million in capital expenditures. The company's fleet utilization was 43%, with specialized work accounting for 60% of total revenue. Copper surpassed gold as the primary revenue driver, representing 41% of the mix, following the Explomin acquisition. Despite a net loss of $9.1 million, Major Drilling remains optimistic for a busier 2025, buoyed by increased senior exploration budgets and recent junior financings.

Major Drilling Corporate Events

Major Drilling Announces New COO for Growth

Dec 13, 2024

Major Drilling has appointed Ashley Martin as the new Chief Operating Officer to drive growth and innovation in operations and technology. With a rich experience in leadership roles within the company, Martin will collaborate with the Chief Technology Officer to implement cutting-edge solutions and enhance operational efficiency. The creation of these roles underscores Major Drilling’s commitment to maintaining its leadership in the specialized drilling market.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.