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Borr Drilling Limited’s (OB:BDRILL): Borr Drilling Limited operates as a drilling contractor to the oil and gas industry worldwide. On 31 December 2017, the ØRE20.08B market-cap posted a loss of -US$88.00M for its most recent financial year. 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.
See our latest analysis for Borr Drilling
Expectation from 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$29.24M in 2020. BDRILL is therefore projected to breakeven around 2 years from today. How fast will BDRILL have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 52.45% year-on-year, on average, which signals high confidence from analysts. 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, but, keep in mind that generally 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’d like to point out is that BDRILL has managed its capital judiciously, with debt making up 5.83% 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:
This article is not intended to be a comprehensive analysis on BDRILL, so if you are interested in understanding the company at a deeper level, take a look at BDRILL’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:
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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.
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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.
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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.