Borr Drilling (BORR) AI Stock Analysis

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Borr Drilling

(NYSE:BORR)

61Neutral

Borr Drilling's stock score reflects a mix of strong revenue growth and profitability improvements along with significant financial risks due to high leverage and negative cash flow. Technical indicators suggest a bearish trend, while valuation metrics indicate potential undervaluation. Positive aspects from the earnings call are counterbalanced by market uncertainties and increased expenses.

Borr Drilling (BORR) vs. S&P 500 (SPY)

Market Cap

$418.82M

Dividend Yield14.04%

Average Volume (3M)5.38M

Price to Earnings (P/E)5.2

Beta (1Y)1.47

Revenue Growth30.97%

EPS Growth281.37%

CountryUS

Employees2,087

SectorEnergy

Sector Strength59

IndustryOil & Gas Drilling

Share Statistics

EPS (TTM)0.33

Shares Outstanding244,926,820

10 Day Avg. Volume4,029,047

30 Day Avg. Volume5,377,520

Financial Highlights & Ratios

PEG Ratio0.02

Price to Book (P/B)N/A

Price to Sales (P/S)0.76

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3.60

Price Target Upside96.72% Upside

Rating ConsensusHold

Number of Analyst Covering1

Borr Drilling Business Overview & Revenue Model

Company DescriptionBorr Drilling Limited operates as an offshore drilling contractor to the oil and gas industry worldwide. It owns, contracts, and operates jack-up rigs for operations in shallow-water areas, including the provision of related equipment and work crews to conduct oil and gas drilling and workover operations for exploration and production. The company serves oil and gas exploration and production companies, such as integrated oil companies, state-owned national oil companies, and independent oil and gas companies. As of December 31, 2021, it operated a fleet of 23 jack-up drilling rigs. The company was formerly known as Magni Drilling Limited and changed its name to Borr Drilling Limited in December 2016. Borr Drilling Limited was incorporated in 2016 and is based in Hamilton, Bermuda.

How the Company Makes MoneyBorr Drilling generates revenue primarily through the leasing of its jack-up drilling rigs to oil and gas companies for exploration and production activities. The company enters into contracts with clients to provide drilling services, typically on a day-rate basis, where clients pay a fixed daily rate for the use of the rigs over a specified contract period. Key revenue streams include long-term contracts with major oil and gas producers, short-term spot market contracts, and options for contract extensions. Borr Drilling's earnings are influenced by factors such as global oil prices, offshore drilling demand, and the company's ability to maintain high utilization rates for its rigs. Significant partnerships and client relationships also play a crucial role in securing contracts and sustaining revenue.

Borr Drilling Financial Statement Overview

Summary

Borr Drilling has shown significant revenue growth and improved profitability, with notable improvements in gross profit margin and operational efficiency. However, the company's high debt levels and negative free cash flow pose financial stability risks that weigh on its financial performance score.

Income Statement

Positive

Borr Drilling has demonstrated a strong improvement in its revenue growth rate, with a significant increase in total revenue from $771.6 million in 2023 to $1.01 billion in 2024. The gross profit margin improved to 54.8%, indicating better control over costs and a solid performance in generating profit from sales. The net profit margin is at 8.1%, reflecting profitability, although there's room for improvement. The company also saw improvements in EBIT and EBITDA margins, now at 37% and 50% respectively, showcasing operational efficiency.

Balance Sheet

Positive

The balance sheet shows a relatively high debt-to-equity ratio of 2.13, which suggests a heavy reliance on debt financing, posing potential risks. However, the equity ratio stands at 29%, indicating a moderate level of financial stability. Return on Equity (ROE) is calculated at 8.3%, which, while positive, suggests there is room for better use of equity to generate profits.

Cash Flow

Neutral

Cash flow performance is a concern, with a negative free cash flow of -$332.1 million in 2024, reflecting high capital expenditures. Although operating cash flow improved to $77.3 million, the free cash flow to net income ratio and operating cash flow to net income ratio indicate that there is insufficient cash generated from operations relative to profits. This suggests potential liquidity issues.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.01B	771.60M	443.80M	245.30M	307.50M
	Gross Profit
554.20M	423.00M	327.30M	125.70M	189.60M
	EBIT
374.20M	250.40M	-14.70M	-91.60M	-117.60M
	EBITDA
505.00M	361.24M	-2.00M	29.20M	-105.33M
	Net Income Common Stockholders
82.10M	22.10M	-292.80M	-193.00M	-305.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
61.60M	102.50M	108.00M	34.90M	19.20M
	Total Assets
3.42B	3.08B	3.00B	3.08B	3.18B
	Total Debt
2.11B	1.70B	1.64B	1.92B	1.91B
	Net Debt
2.05B	1.60B	1.53B	1.88B	1.89B
	Total Liabilities
2.43B	2.10B	2.10B	2.19B	2.13B
	Stockholders Equity
993.30M	984.00M	897.80M	889.90M	1.05B
Cash Flow		Free Cash Flow
-332.10M	-164.70M	-20.80M	-77.80M	-97.10M
	Operating Cash Flow
77.30M	-50.70M	62.50M	-58.90M	-54.70M
	Investing Cash Flow
-409.40M	-104.20M	-82.60M	40.90M	-119.80M
	Financing Cash Flow
292.00M	139.00M	92.60M	44.80M	65.20M

Borr Drilling Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.83

Price Trends

50DMA

2.67

Negative

100DMA

3.21

Negative

200DMA

4.42

Negative

Market Momentum

MACD

-0.14

Negative

RSI

40.51

Neutral

STOCH

23.05

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BORR, the sentiment is Negative. The current price of 1.83 is below the 20-day moving average (MA) of 2.23, below the 50-day MA of 2.67, and below the 200-day MA of 4.42, indicating a bearish trend. The MACD of -0.14 indicates Negative momentum. The RSI at 40.51 is Neutral, neither overbought nor oversold. The STOCH value of 23.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BORR.

Borr Drilling Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NGS	79 Outperform	$224.49M	13.03	7.02%	―	29.36%	261.48%
OII	65 Neutral	$1.73B	11.85	21.97%	―	9.75%	50.93%
VAL	62 Neutral	$2.10B	5.76	17.67%	―	32.42%	-56.29%
BORR	61 Neutral	$418.82M	5.23	8.30%	14.04%	30.97%	281.37%
Sector *	57 Neutral	$7.70B	4.18	-3.52%	8.32%	0.35%	-64.68%
RIG	52 Neutral	$1.92B	―	-4.95%	―	24.44%	53.99%
NBR	42 Neutral	$454.52M	―	-89.17%	―	-2.52%	-450.75%

* Energy Sector Average

Performance Comparison

BORR

Borr Drilling

1.83

-3.80

-67.50%

NBR

Nabors Industries

29.86

-55.34

-64.95%

NGS

Natural Gas Services Group

18.24

-4.88

-21.11%

OII

Oceaneering International

17.07

-7.45

-30.38%

RIG

Transocean

2.37

-4.01

-62.85%

VAL

Valaris

31.24

-41.50

-57.05%

Borr Drilling Earnings Call Summary

Earnings Call Date: Feb 19, 2025 | % Change Since: -38.18% | Next Earnings Date: Jun 3, 2025

Earnings Call Sentiment Neutral

The earnings call revealed a balance of positive achievements such as increased revenue and strong utilization rates, alongside challenges like market uncertainties and rig suspensions. While there were significant achievements in contracting and completion of new builds, the financial outlook was tempered by concerns over market conditions and increased expenses.

Highlights

Increased Operating Revenue and EBITDA

Operating revenue increased by $21.5 million over Q3 2024. Adjusted EBITDA for Q4 2024 was $136.7 million, an increase of $21.2 million or 18% compared to Q3.

High Utilization Rates

Borr Drilling achieved a technical utilization rate of 98.9% and an economic utilization rate of 97.1%.

Successful Completion of New Build Program

In November 2024, Borr Drilling successfully completed a new build program with the delivery of the final rig VAR, marking the end of growth capital expenditures.

Strong Contracting Performance

Borr Drilling secured $795 million in backlog at an average rate of $177,000 per day in 2024.

Positive Cash Flow Impact Expected

Fewer special periodic surveys scheduled for 2025, with budgeted capital expenditures set below $50 million for the year.

Lowlights

Market Uncertainties and Headwinds

Softening demand and declining day rates in the second half of 2024 signaled potential headwinds for the jackup market heading into 2025.

Rig Suspensions in Saudi Arabia and Mexico

A weaker market observed with rig suspensions in Saudi Arabia and Mexico, impacting the first quarter of 2025.

Increased Financial Expenses

Total financial expenses increased by $5.7 million, primarily due to interest on additional debt issued in 2024.

Cash Decrease

Cash decreased by $124.1 million compared to the prior quarter due to various factors including net cash used in investing activities.

Company Guidance

During the Borr Drilling Limited Q4 2024 earnings call, the company provided several key metrics and guidance for 2025. The fourth quarter operating revenue increased by $21.5 million from Q3, primarily due to higher day rates, resulting in an adjusted EBITDA of $136.7 million. The company achieved a technical utilization rate of 98.9% and an economic utilization rate of 97.1% for the quarter. For the full year, Borr Drilling delivered an adjusted EBITDA within the guidance range of $500 to $550 million, despite various headwinds. Looking ahead to 2025, the company has approximately 6,700 contracted rig days, representing 77% of total available rig days, with an average day rate of $149,000, up from $136,000 in 2024. Capital expenditures for 2025 are expected to be below $50 million, with liquidity positively impacted by a $125 million Mexican payment arrangement and anticipated mobilization payments of $44 million. The board declared a cash distribution of $0.02 per share for Q4 2024 and emphasized maintaining a strong balance sheet amidst market uncertainties.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.