Borr Drilling (NYSE:BORR) has just wrapped up FY 2025 with fourth quarter revenue of US$259.4 million and a small net loss of US$1 million, which translated to basic EPS of roughly US$0.00. Trailing 12 month revenue stood at about US$1.0 billion and net income reached US$45 million, or EPS of US$0.17. Over the past six reported quarters, revenue has moved between US$216.6 million and US$277.1 million per quarter, with quarterly EPS ranging from a loss of US$0.07 to a profit of US$0.15. This sets up a mixed picture of profitability that leaves investors focused on how margins are holding up against the growth story in the forecasts.
See our full analysis for Borr Drilling.With the headline numbers on the table, the next step is to see how this earnings profile lines up with the big narratives around Borr Drilling's growth potential, risk profile, and margin trajectory.
See what the community is saying about Borr Drilling
Margins Slip From 8.1% To 4.4%
- Trailing net profit margin is 4.4% on US$1.0b of revenue and US$45 million of net income, down from 8.1% a year earlier on US$1.0b of revenue and US$82.1 million of net income.
- What stands out against the bullish view of rising margins is that recent quarters include a loss of US$1 million in Q4 FY 2025 and a larger loss of US$16.9 million in Q1 FY 2025, even though the bullish story talks about strong rig demand supporting sustainable margin strength.
- Bulls point to strong global rig demand and a young fleet as support for higher margins over time. However, the trailing margin compression from 8.1% to 4.4% shows that recent profitability has been tighter than that thesis suggests.
- Analysts in the bullish camp also expect earnings to reach US$25.7 million by around 2028 with margins at 2.4%, which is lower than the current 4.4% trailing margin, so the recent pressure on margins is already in the direction of those expectations.
Stronger rig demand and a younger fleet are central to the bullish case, so if you want to see how supporters connect those themes to future earnings, check out the 🐂 Borr Drilling Bull Case
High P/E At 41.4x Despite Mixed Profit Trend
- The shares trade on a trailing P/E of 41.4x, above the Energy Services industry at 29.2x and peers at 12.8x, while trailing earnings over the last twelve months are US$45 million and quarterly results have swung between a profit of US$35.1 million in Q2 FY 2025 and a loss of US$1 million in Q4 FY 2025.
- Bears highlight that paying 41.4x earnings is demanding when interest coverage is weak and profitability has been uneven, and the recent net loss in Q4 FY 2025 and the early year loss of US$16.9 million in Q1 FY 2025 give that concern some footing.
- The cautious narrative also points to high leverage and refinancing needs, and the data here notes that interest payments are not well covered by earnings, which can become more important if margins stay closer to 4.4% rather than the prior 8.1% level.
- On top of that, shareholders were diluted over the past year, so any future earnings recovery would be spread across more shares, which matters when the stock is already at a higher P/E than both industry and direct peers.
If you want to see why skeptics think this valuation could be hard to support if earnings stay bumpy, take a look at the 🐻 Borr Drilling Bear Case
Growth Forecasts Versus Weak Interest Coverage
- Analysts in the dataset expect earnings to grow around 45.8% per year and revenue about 11.1% per year, yet trailing interest coverage is described as weak and the last twelve months produced US$45 million of net income compared with US$72.3 million a year earlier, when the margin was 8.1% instead of 4.4%.
- Consensus narrative talks about strong energy demand, a modern fleet, and recent equity raises supporting growth and resilience, while the numbers here show that this expected growth is starting from a period of thinner margins and limited interest cover.
- The current share price of US$6.05 sits well below the provided DCF fair value of about US$40.05. This aligns with the idea that there could be long term upside if those 45.8% earnings growth forecasts are met despite today’s 4.4% margin.
- At the same time, equity issuance and weak interest coverage mean more of that future earnings growth could be needed just to comfortably service debt and support the balance sheet rather than flowing straight through to shareholders.
Next Steps
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Borr Drilling on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
With mixed signals on margins, valuation, and growth expectations, now is a good time to review the underlying figures yourself and decide how comfortable you are with both the potential upside and the concerns flagged in the 2 key rewards and 3 important warning signs.
See What Else Is Out There
Between thinner 4.4% margins, weak interest coverage, shareholder dilution and a 41.4x P/E, Borr Drilling carries meaningful earnings and balance sheet risk.
If those risks feel a bit too intense for your comfort, you can quickly focus on companies with stronger financial footing using the solid balance sheet and fundamentals stocks screener (39 results) to spot alternatives that may better match your risk tolerance.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com