Major Drilling Group Intl (MDI:TSE) Fundamental Valuation Report

Fundamental Valuation Report

Major Drilling Group Intl(MDI:TSE)

Basic Materials:Other Industrial Metals & Mining

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$6.32 (CAD) 09/10/2020

Weighted Valuation
$6.51 (CAD)

Overall Rating
Fairly valued to slightly Undervalued by 3.1%

Valuation Models Multiples: $7.56 (CAD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $8.00 this stock is Undervalued

Company Overview (MDI:TSE CAD)

Price 6.32
Range 6.20 – 6.62
52 week 2.38 – 7.02
Open 6.62
Vol / Avg. 191152/182471
Mkt cap 509.65M
P/E 0.00
Div/yield 0.00/0.00
EPS -0.88
Shares 80.64M
Beta 1.61

Company Description

Major Drilling Group International Inc is engaged in the business of contract drilling. Basically, it provides services to companies which are involved in mining and mineral exploration. It offers surface and underground coring, directional, reverse circulation, sonic, geotechnical, environmental, water-well, coal-bed methane, shallow gas, and underground percussive/long hole drilling services, as well as various drilling-related mine services. The company has operations in Canada, the United States, Mexico, South America, Asia, Africa and Europe.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for MDI:TSE

Using a discounted cash flow model we generated an intrinsic value of $3.67 (CAD) for MDI:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

MDI:TSE Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $3.67 1% 5% 1% 5%
WACC (or Ke) 14.32 $4.06 $3.35
Terminal Growth Rate 3.00 $3.41 $3.99
Tax Rate 0.27 $4.00 $3.35
Cash Flow 75,513,445 $3.40 $3.95
Capital Expenditures -16,748,800 $3.62 $3.73
Long Term Debt 10,235,000 $3.68 $3.67

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $6.06 (CAD) for MDI:TSE. We also generated a valuation of $10.87 (CAD) using other metrics and comparables.
The comparable companies were Standard Lithium (SLL:TSX), Bear Creek Mining (BCM:TSX), Cornerstone Capital Res (CGP:TSX), EMX Royalty (EMX:TSX) and FPX Nickel (FPX:TSX).

Company MDI:TSE End Date Value
Earnings/Share ($0.93) (CAD)
Book Value/Share $3.63 (CAD)
Sales/Share $4.73 (CAD)
Cash Flow/Share $0.39 (CAD)
EBITDA/Share ($0.19) (CAD)
Price Based on Comps Adjustment Factor (%)
$0.00 (CAD) 0.0
$8.90 (CAD) -31.9
$0.00 (CAD) -92.1
($0.68) (CAD) -41.2
$0.00 (CAD) 0.0
MDI:TSE Ratios Used Average Values SLL:TSX BCM:TSX CGP:TSX EMX:TSX FPX:TSX
0.00 PE Ratio 0.00 0.00 0.00 0.00 0.00 0.00
1.74 PB Ratio 8.62 2.41 2.70 1.53 3.15 33.32
1.34 PS Ratio 458.19 0.00 0.00 681.36 235.01 0.00
16.29 PCF Ratio 723.08 723.08 0.00 0.00 0.00 0.00
0.00 EV to EBITDA 0.00 0.00 0.00 0.00 0.00 0.00

Multiples

Using a multiples approach we generated a valuation of  $7.56 (CAD) for MDI:TSE

Company MDI:TSE End Date Value
Earnings/Share ($0.93) (CAD)
Book Value/Share $3.63 (CAD)
Sales/Share $4.73 (CAD)
Cash Flow/Share $0.39 (CAD)
EBITDA/Share ($0.19) (CAD)
Price Based on Comps Adjustment Factor
$0.00 (CAD) 0
$4.51 (CAD) 0
$6.57 (CAD) 0
$11.61 (CAD) 0
$0.00 (CAD) 0
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 1.24
PS Ratio 1.39
PCF Ratio 29.92
EV to EBITDA 26.11

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  MDI:TSE for the last 10 years was  1.21

We ran the Adjusted Book Value for  MDI:TSE and generated a book value of  $3.63 (CAD)
By multiplying these we get an adjusted valuation of  $4.41 (CAD)

Analyst Data

In the Stockcalc database there are 5 analysts that provide a valuation for MDI:TSE. The 5 analysts have a concensus valuation for MDI:TSE for 2021 of $8.00 (CAD).

MDI:TSE Major Drilling Group Intl

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 0 0 4.6000 Buy 2020-9-9

Current Price: 6.32 CAD

Analyst Consensus
CAD Millions 2021 2022
Mean EPS 0.11 0.23
# EPS Analysts 5 3
Mean Revenue 416.60 498.50
# Revenue Analysts 5 3
Mean Target Price 8.00
Mean Cash Flow 0.63 0.79
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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