Independence Contract Drilling Inc’s (NYSE:ICD): Independence Contract Drilling, Inc. provides land-based contract drilling services for oil and natural gas producers in the United States. With the latest financial year loss of -US$24.30m and a trailing-twelve month of -US$22.17m, the US$143.07m market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which ICD will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for ICD, its year of breakeven and its implied growth rate.
According to the industry analysts covering ICD, breakeven is near. They anticipate the company to incur a final loss in 2018, before generating positive profits of US$7.60m in 2019. So, ICD is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which ICD must grow year-on-year. It turns out an average annual growth rate of 132.51% is expected, which is rather optimistic! If this rate turns out to be too aggressive, ICD may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of ICD’s upcoming projects, however, bear in mind that by and large oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. ICD has managed its capital judiciously, with debt making up 23.49% of equity. This means that ICD has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on ICD, so if you are interested in understanding the company at a deeper level, take a look at ICD’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:
- Valuation: What is ICD worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ICD is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Independence Contract 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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.