Deep Value Driller AS (OB:DVD) On The Verge Of Breaking Even

Deep Value Driller AS (OB:DVD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Deep Value Driller AS engages in owning, contracting, and managing drilling rigs in West Africa, International Waters, and Norway. With the latest financial year loss of US$24m and a trailing-twelve-month loss of US$282k, the kr2.0b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Deep Value Driller's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Deep Value Driller

Deep Value Driller is bordering on breakeven, according to some Norwegian Energy Services analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$23m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 33%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Deep Value Driller given that this is a high-level summary, however, keep in mind that typically an energy 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.

Before we wrap up, there’s one issue worth mentioning. Deep Value Driller currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Deep Value Driller, so if you are interested in understanding the company at a deeper level, take a look at Deep Value Driller's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Valuation: What is Deep Value Driller 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 Deep Value Driller is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Deep Value Driller’s board and the CEO’s background.
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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.