When Can We Expect A Profit From Borr Drilling Limited (OB:BDRILL)?

Borr Drilling Limited’s (OB:BDRILL): Borr Drilling Limited operates as a drilling contractor to the oil and gas industry worldwide. The US$20.68b market-cap posted a loss in its most recent financial year of -US$88.00m and a latest trailing-twelve-month loss of -US$116.80m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which BDRILL 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 BDRILL, its year of breakeven and its implied growth rate.

View out our latest analysis for Borr Drilling

Expectation from Energy Services analysts is BDRILL is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$112.38m in 2020. Therefore, BDRILL is expected to breakeven roughly a couple of months from now! 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 112.23%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

OB:BDRILL Past Future Earnings July 3rd 18
OB:BDRILL Past Future Earnings July 3rd 18

I’m not going to go through company-specific developments for BDRILL given that this is a high-level summary, but, keep in mind that by and large an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I’d like to point out is that BDRILL has managed its capital judiciously, with debt making up 15.63% of equity. This means that BDRILL has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of BDRILL to cover in one brief article, but the key fundamentals for the company can all be found in one place – BDRILL’s company page on Simply Wall St. I’ve also put together a list of key factors you should further research:

  1. 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.
  2. 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.
  3. 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.