Market Sentiment Around Loss-Making Dolphin Drilling AS (OB:DDRIL)

We feel now is a pretty good time to analyse Dolphin Drilling AS' (OB:DDRIL) business as it appears the company may be on the cusp of a considerable accomplishment. Dolphin Drilling AS provides drilling services to the offshore oil and gas industry in the United Kingdom, India, Norway, and internationally. The kr771m market-cap company’s loss lessened since it announced a US$71m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$45m, as it approaches breakeven. As path to profitability is the topic on Dolphin Drilling's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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According to the 3 industry analysts covering Dolphin Drilling, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of US$9.5m in 2027. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 87%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Dolphin Drilling's upcoming projects, though, take into account that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Check out our latest analysis for Dolphin Drilling

One thing we would like to bring into light with Dolphin Drilling is its debt-to-equity ratio of 113%. Generally, the rule of thumb is 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:

There are too many aspects of Dolphin Drilling to cover in one brief article, but the key fundamentals for the company can all be found in one place – Dolphin Drilling's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Dolphin Drilling 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 Dolphin Drilling 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 Dolphin Drilling’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.

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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.