Major Drilling Group International Inc (TSX: MDI) is engaged in the business of contract drilling, and it provides services to companies that are involved in mining and mineral exploration. It maintains field operations and offices in many countries across continents.
Key highlights
Source: Company
Source: Company
Financial overview of Q1 2022 (in thousands of Canadian dollar)
Source: Company
Risks associated with investment
The shortage of experienced drill crews could put pressure on labor costs and productivity, especially in the Company’s most active markets, which could affect the company’s operating margin as well as its bottom line.
Valuation Methodology (Illustrative): EV to Sales
Stock recommendation
The company has showcased some outstanding financial numbers along with growth in topline as well as in bottom line. The demand for the Company’s services remains strong, and more work has been secured for the upcoming quarter with more favorable terms and prices, which is a significant plus. Also, it expects to improve margins going forward, although it will be somewhat offset by cost inflation for supplies and labor. Therefore, based on the above rationale and valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of CAD 8.72 on October 12, 2020.
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
Technical Analysis Summary
One-Year Technical Price Chart (as on October 12, 2021). Source: REFINITIV, Analysis by Kalkine Group
*The reference data in this report has been partly sourced from REFINITIV.
Disclaimer
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