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Major Drilling Group (TSE:MDI)
TSX:MDI
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Major Drilling
(TSX:MDI)
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Rating:66Neutral
Price Target:
C$17.00
▲(8.21% Upside)
Major Drilling's overall stock score reflects a mix of moderate financial performance, positive technical indicators, and a high valuation. The earnings call provided a cautiously optimistic outlook, but current financial pressures and operational challenges weigh on the score.
Positive Factors
Strong balance sheet and low leverage
Conservative leverage and a strong equity ratio provide durable financial flexibility, enabling the company to fund fleet investments, weather commodity cycles and pursue opportunistic deployments without relying heavily on external debt, supporting long-term operational stability.
Record revenue growth and market demand
A record quarter driven by gold and copper exposure reflects structural demand for drilling services. Higher commodity-driven exploration budgets and the company’s scale position it to capture sustained contract activity and support multi-quarter revenue expansion.
Fleet scale and ample liquidity for rapid deployment
A large drill fleet with available capacity and meaningful near-term liquidity allows quick scaling into higher-demand projects, reducing lead times and improving bidding competitiveness. This operational readiness supports durable revenue capture as activity ramps.
Negative Factors
Margin compression reducing profitability
Significant margin erosion signals structural cost or pricing pressures—competitive pricing, higher training/maintenance and G&A increases—which reduce retained earnings and limit capital available for reinvestment, making profitability recovery a longer-term challenge.
Weak free cash flow and cash conversion
Poor cash conversion and declining FCF constrain the company’s ability to self-fund fleet expansion, working capital and acquisitions. If persistent, this reduces financial flexibility and increases reliance on external funding ahead of sustained profit improvement.
Operational risk from Indonesia suspension
Operational incidents causing activity suspensions highlight execution and country-risk exposure. Such disruptions can materially lower utilization, increase remediation costs, and harm customer relationships, making regional revenue durability and margin stability more uncertain.
Major Drilling (MDI) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$1.29B
Dividend YieldN/A
Average Volume (3M)198.85K
Price to Earnings (P/E)80.8
Beta (1Y)1.87
Revenue Growth20.42%
EPS Growth-61.80%
CountryUS
Employees2,500
SectorBasic Materials
Sector Strength58
IndustryIndustrial Materials
Share Statistics
EPS (TTM)0.17
Shares Outstanding82,052,734
10 Day Avg. Volume215,040
30 Day Avg. Volume198,852
Financial Highlights & Ratios
PEG Ratio-0.51
Price to Book (P/B)1.59
Price to Sales (P/S)1.11
P/FCF Ratio20.45
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$23.33Price Target Upside48.50% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Major Drilling Business Overview & Revenue Model
Company DescriptionMajor Drilling Group International Inc. provides contract drilling services for mining and mineral exploration companies. The company offers a suite of drilling services, including surface and underground coring, directional, reverse circulation, sonic, geotechnical, environmental, water-well, coal-bed methane, shallow gas, underground percussive, longhole drilling, surface drill and blast, and related mining services. The company was founded in 1980 and is based in Moncton, Canada with additional offices in Mexico, South America, Asia, Africa, USA, and Australia.
How the Company Makes MoneyMajor Drilling generates revenue primarily through its drilling services, which are billed on a contract basis. The company's key revenue streams include the provision of surface and underground drilling services, as well as specialized drilling techniques tailored to the specific needs of clients in the mining sector. MDI's earnings are influenced by factors such as commodity prices, exploration budgets, and mining activity levels, which fluctuate based on market demand. Additionally, significant partnerships with major mining companies and long-term contracts contribute to stable revenue generation. The company's focus on expanding its service offerings and geographic reach also plays a crucial role in enhancing its earnings potential.
Major Drilling Earnings Call Summary
Earnings Call Date:Dec 10, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Feb 26, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mix of strong revenue growth and strategic positioning for future demand, balanced against challenges in margin decline, operational issues in Indonesia, and increased costs. While the company is optimistic about future opportunities, current financial pressures and operational challenges present notable concerns.Q2-2026 Updates
Positive Updates
Record-Setting Quarterly Revenue
Quarterly revenue increased by 29% to $244 million, marking the highest quarterly revenue in the company's 45-year history.
Strong Performance in North and South America
Canadian operations saw a 63% year-over-year increase in revenue, with significant growth in the Peruvian market following the acquisition of Explomin.
Increased Cash Position and Liquidity
The company increased its cash position by $17.6 million, ending the quarter with $14.3 million in net cash, and total available liquidity grew to over $149 million.
Positive Outlook for Calendar 2026
Expectations of increased demand for drilling services due to higher gold and copper prices, as well as the growing focus on critical minerals.
Negative Updates
Margin Decline
Adjusted gross margin percentage decreased to 26% from 30.5% in the same period last year due to competitive pricing and training and maintenance programs.
Operational Challenges in Indonesia
Suspension of mine site activity in Indonesia due to operational incidents, affecting the Australasian and African region's performance.
Increased G&A Costs
General and administrative costs increased by $3.6 million to $21.7 million, partly due to the addition of Explomin's operations.
Lower Net Earnings
Net earnings decreased to $13.9 million or $0.17 per share, compared to $18.2 million or $0.22 per share in the prior year period.
Company Guidance
During the conference call for Major Drilling's second quarter of fiscal 2026, the company reported a record-setting quarter with a 29% year-over-year increase in revenue, reaching $244 million, the highest in its 45-year history. The Canadian operations experienced a notable 63% revenue increase, while revenue in North and South America, particularly Canada and Peru, drove overall growth. The company maintained a positive outlook for calendar 2026, anticipating increased demand and continued proactive efforts to leverage its strong balance sheet for rapid deployment. Despite challenges in the Australasian and African regions, impacted by an operational incident in Indonesia, the company remains well-positioned, with a fleet of 707 drills at 51% utilization. The company generated EBITDA of $37.7 million, with net earnings of $13.9 million or $0.17 per share. The call also highlighted the impact of increased gold and copper prices, with gold accounting for 39% and copper 31% of the revenue. Looking ahead, the company focuses on preparing for a busier year, with significant investments in fleet and inventory, while addressing potential labor cost pressures.Major Drilling Financial Statement Overview
Summary
Major Drilling shows moderate financial performance with revenue growth but declining profitability margins. The balance sheet is strong with low leverage, but cash flow challenges are evident, indicating a need for improved cash management.Income Statement
Major Drilling's income statement shows a moderate performance with a TTM revenue growth rate of 7.18%, indicating a positive trend. However, the gross profit margin has decreased from 24.04% in 2023 to 17.77% in TTM, suggesting pressure on cost management. The net profit margin also declined to 3.57% in TTM from 10.18% in 2023, reflecting reduced profitability. Despite these challenges, the company maintains a stable EBIT margin of 5.36% and an EBITDA margin of 14.09% in TTM, which are reasonable for the industry.65
Positive
Balance Sheet
The balance sheet is strong with a low debt-to-equity ratio of 0.071 in TTM, indicating conservative leverage. The return on equity has decreased to 4.93% in TTM from 16.55% in 2023, showing reduced efficiency in generating returns for shareholders. However, the equity ratio remains robust, reflecting a solid capital structure with stockholders' equity covering a significant portion of total assets.72
Positive
Cash Flow
Cash flow analysis reveals challenges with a negative free cash flow growth rate of -22.16% in TTM, indicating potential cash management issues. The operating cash flow to net income ratio is 0.79, suggesting that operating cash flows are not fully covering net income, which could strain liquidity. The free cash flow to net income ratio of 0.28 in TTM further highlights the need for improved cash generation relative to earnings.58
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2024 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 819.03M | 706.69M | 727.58M | 735.74M | 650.41M | 432.08M |
| Gross Profit | 132.55M | 152.72M | 130.54M | 176.90M | 139.77M | 64.09M |
| EBITDA | 99.72M | 125.22M | 102.54M | 145.05M | 114.09M | 52.05M |
| Net Income | 15.94M | 53.09M | 25.95M | 74.92M | 53.46M | 10.03M |
Balance Sheet | ||||||
| Total Assets | 778.95M | 612.18M | 718.74M | 611.68M | 557.08M | 388.53M |
| Cash, Cash Equivalents and Short-Term Investments | 64.69M | 96.22M | 45.99M | 94.43M | 71.26M | 22.36M |
| Total Debt | 36.83M | 4.72M | 37.13M | 25.55M | 55.39M | 19.21M |
| Total Liabilities | 220.94M | 118.35M | 196.64M | 159.11M | 197.32M | 108.37M |
| Stockholders Equity | 558.01M | 493.83M | 522.10M | 452.58M | 359.76M | 280.16M |
Cash Flow | ||||||
| Free Cash Flow | 20.07M | 38.50M | 28.39M | 54.50M | 44.93M | 3.15M |
| Operating Cash Flow | 77.48M | 112.03M | 100.92M | 113.19M | 94.87M | 34.45M |
| Investing Cash Flow | -139.95M | -78.39M | -178.03M | -63.98M | -85.84M | -29.38M |
| Financing Cash Flow | 27.28M | -32.52M | 25.92M | -29.61M | 38.25M | -37.23M |
Major Drilling Technical Analysis
Positive
15.71
Price Trends
13.37
Positive
12.45
Positive
10.58
Positive
Market Momentum
0.48
Negative
73.83
Negative
89.82
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MDI, the sentiment is Positive. The current price of 15.71 is above the 20-day moving average (MA) of 14.04, above the 50-day MA of 13.37, and above the 200-day MA of 10.58, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 73.83 is Negative, neither overbought nor oversold. The STOCH value of 89.82 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MDI.
Major Drilling Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | C$276.86M | 11.90 | 18.35% | ― | -17.73% | -36.29% | |
69 Neutral | C$174.50M | 13.27 | 7.68% | ― | 25.76% | 15.68% | |
67 Neutral | C$63.29M | 13.21 | 7.13% | ― | 1.04% | 107.55% | |
66 Neutral | C$1.29B | 80.77 | 3.86% | ― | 20.42% | -61.80% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
56 Neutral | C$1.03B | -900.00 | -0.62% | ― | ― | 41.18% | |
48 Neutral | C$785.96M | -109.05 | -38.72% | ― | ― | -130.77% |
* Basic Materials Sector Average
TSE:MDI
Major Drilling
15.71
7.33
87.47%
TSE:FAR
Foraco International
2.81
0.55
24.34%
TSE:FVL
Freegold Ventures
1.80
0.95
111.76%
TSE:GEO
Geodrill
3.70
0.52
16.35%
TSE:GQC
GoldQuest Mining
2.29
2.00
676.27%
TSE:OGD
Orbit Garant Drill
1.67
0.74
79.57%
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.