One-glance verdict
Within fair range
$55.83 our estimate vs market $49.08
Wall Street consensus: $53.33 (-4.5% lower than our fair-value estimate)
12% below our estimate
Fundamentals snapshot
Seadrill Limited
SDRL · NYQ · Energy · Oil & Gas Drilling
Current price
$49.08
52-week range
$28.10 - $55.47
Market cap
$3.07B
Balance sheet
Stretched
1.15x Concerning
Net debt $417.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 6.6% last year.
- Reward Returns 0.0% on equity, ahead of 40% of its peers.
- Risk Stock trades 18504.5% above its 5-year average P/E.
- Risk Net debt grew 668.4% over 3 years.
What this company does
Seadrill Limited
Seadrill owns and operates massive offshore drilling rigs, which are like giant floating platforms used to find and extract oil and gas from deep under the ocean floor. The company makes money by leasing these rigs and their expert crews to large energy companies, so its business tends to do well when high oil prices encourage more offshore drilling projects.
How the company got here
Seadrill was started in 2005 and grew quickly by buying other offshore drilling companies. [2, 5] When oil prices crashed around 2014, the company ran into deep financial trouble because it had a lot of debt (money it owed). [6] This led Seadrill to file for Chapter 11 bankruptcy (a legal process that allows a company to reorganize its finances) twice, once in 2017 and again in 2021. [1, 2, 3] After the second bankruptcy, the company emerged in 2022 with a healthier financial structure and later acquired another drilling company called Aquadrill to strengthen its fleet. [2, 4, 8]
What it actually does
Seadrill doesn't own or sell any oil and gas; instead, it's like a specialized rental service for big energy companies. [2, 8] It owns and operates massive drilling rigs that oil and gas companies hire to explore for and produce oil from under the ocean floor. [7, 15] Seadrill provides the rig and the expert crew to run it, and customers like major oil companies pay a daily fee, known as a 'dayrate', for these services. [8] The company operates its rigs in major offshore oil and gas regions around the world, including the coasts of Brazil and West Africa, and in the Gulf of Mexico. [7, 8]
Floaters
This is Seadrill's main business and includes its most advanced equipment, like drillships and semi-submersible rigs. [9, 11] These are massive vessels that float on the ocean's surface and can drill in very deep water, sometimes miles down. [5, 10] Oil companies pay to contract these sophisticated rigs for their deepwater projects, which are often large and complex. This segment is the core of Seadrill's focus, as these high-tech vessels can command higher rental prices.
Jack-up Rigs
This part of the business involves rigs designed for shallower water. [9, 10] A jack-up rig is a mobile drilling platform with long legs that can be lowered to the ocean floor, lifting the platform out of the water to create a stable base for drilling. [5, 9] While still a part of its operations, Seadrill has been focusing more on its deepwater floater fleet. These rigs are typically used for less complex projects closer to shore compared to the floater fleet.
What management is betting on now
The company's main goal is to operate its modern, high-tech fleet of drilling rigs safely and efficiently to attract top-tier customers. [8, 11] Management is heavily focused on maintaining a strong balance sheet (a snapshot of the company's financial health) to avoid the debt problems that hurt it in the past. [8, 13] Seadrill is also investing in technology, using data from its rigs to predict maintenance needs and improve performance, which helps lower costs and increase reliability for its customers. [11, 12, 14] By focusing on financial discipline and operational excellence, the company aims to generate steady cash flow and return value to its investors. [8, 13]
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$449.00M
Net income
$29.00M
Diluted EPS
0.47
Operating cash flow
$-18.00M
Free cash flow
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Sources
Revenue
$358.00M
Net income
$-7.00M
Diluted EPS
-0.11
Operating cash flow
$-22.00M
Free cash flow
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Sources
Revenue
$362.00M
Net income
$-10.00M
Diluted EPS
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Operating cash flow
$-40.00M
Free cash flow
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Sources
Revenue
$363.00M
Net income
$-11.00M
Diluted EPS
-0.17
Operating cash flow
$28.00M
Free cash flow
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Sources
Revenue
$377.00M
Net income
$-42.00M
Diluted EPS
-0.68
Operating cash flow
$11.00M
Free cash flow
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Sources
Revenue
$335.00M
Net income
$-14.00M
Diluted EPS
-0.23
Operating cash flow
$-27.00M
Free cash flow
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Sources
Revenue
$289.00M
Net income
$101.00M
Diluted EPS
1.58
Operating cash flow
$7.00M
Free cash flow
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Sources
Revenue
$354.00M
Net income
$32.00M
Diluted EPS
0.49
Operating cash flow
$-27.00M
Free cash flow
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Sources
Is it cheap or expensive?
Fair value $55.83 vs current price $49.08
Wall Street consensus is the average analyst price target: $53.33 (-4.5% lower than our fair-value estimate).
Our most-likely fair value is $55.83 a share — about 13.7% away from today's price of $49.08, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $417.0M. Interest coverage 1.1x.
Net debt
$417.00M
Interest coverage
1.15x
Seadrill Limited's profit covers its interest bill about 1.1 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
SDRL
BASELINE
Seadrill Limited
Total debt $754.00M Interest coverage 1.15x This is the baseline the peer rows are being compared against.
Total debt $1.91B Interest coverage 3.17x +176% vs SDRL Carries about 2.8x more debt cushion than SDRL.
Total debt $5.12B Interest coverage 1.27x +11% vs SDRL Has roughly the same debt cushion as SDRL.
Total debt $1.17B Interest coverage 5.02x +337% vs SDRL Carries about 4.4x more debt cushion than SDRL.
Total debt $2.49B Interest coverage 1.48x +29% vs SDRL Carries about 1.3x more debt cushion than SDRL.
What you should know
The case for and against SDRL
3 Rewards
3 Risks
Rewards
-
Revenue grew 6.6% last year.
-
Returns 0.0% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 1/10 years.
Risks
-
Stock trades 18504.5% above its 5-year average P/E.
-
Net debt grew 668.4% over 3 years.
-
Insider ownership is only 0.6% (peer median: 11.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
1,636.00x
Forward P/E
14.31x
P/B
1.07x
P/S
2.08x
EV/EBITDA
8.59x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
35.3%
Operating margin
16.7%
Net margin
0.1%
ROE
0.0%
ROA
2.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.26x
Current ratio
2.50x
Quick ratio
1.96x
Total debt
$754.00M
Total cash
$337.00M
Growth
How the business has been compounding
Revenue TTM
$1.53B
Revenue 5Y CAGR
12.2%
EPS TTM
0.03
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$-52.00M
Free CF TTM
$-138.00M
FCF margin
-9.0%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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