Borr Drilling Limited's (OB:BDRILL): Borr Drilling Limited operates as an offshore drilling contractor to the oil and gas industry worldwide. The kr6.7b market-cap posted a loss in its most recent financial year of -US$190.5m and a latest trailing-twelve-month loss of -US$307.7m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on BDRILL’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for BDRILL’s growth and when analysts expect the company to become profitable.
Consensus from the 8 Energy Services analysts is BDRILL is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$52m in 2021. BDRILL is therefore projected to breakeven around 2 years from today. What rate will BDRILL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 82%, which is rather optimistic! If this rate turns out to be too aggressive, BDRILL may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for BDRILL given that this is a high-level summary, though, take into account that typically oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with BDRILL is its debt-to-equity ratio of 115%. Typically, debt shouldn’t exceed 40% of your equity, which in BDRILL’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of BDRILL which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at BDRILL, take a look at BDRILL’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further research:
- Historical Track Record: What has BDRILL's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Borr Drilling’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.