Analyzing Seadrill (NYSE:SDRL) and Valaris (NYSE:VAL)

Seadrill (NYSE:SDRL) and Valaris (NYSE:VAL) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, profitability, earnings, institutional ownership and valuation.

Profitability

This table compares Seadrill and Valaris’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Seadrill	5.68%	1.58%	1.12%
Valaris	11.18%	12.36%	6.25%

Valuation and Earnings

This table compares Seadrill and Valaris”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Seadrill	$1.39 billion	1.31	$446.00 million	$1.12	26.01
Valaris	$2.36 billion	1.42	$373.40 million	$3.84	12.24

Seadrill has higher earnings, but lower revenue than Valaris. Valaris is trading at a lower price-to-earnings ratio than Seadrill, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Seadrill has a beta of 1.61, meaning that its stock price is 61% more volatile than the S&P 500. Comparatively, Valaris has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Insider and Institutional Ownership

95.7% of Seadrill shares are owned by institutional investors. Comparatively, 96.7% of Valaris shares are owned by institutional investors. 0.2% of Seadrill shares are owned by company insiders. Comparatively, 0.7% of Valaris shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Seadrill and Valaris, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Seadrill	0	1	3	0	2.75
Valaris	1	6	1	0	2.00

Seadrill currently has a consensus price target of $48.00, indicating a potential upside of 64.78%. Valaris has a consensus price target of $46.20, indicating a potential downside of 1.72%. Given Seadrill’s stronger consensus rating and higher possible upside, research analysts clearly believe Seadrill is more favorable than Valaris.

Summary

Valaris beats Seadrill on 8 of the 14 factors compared between the two stocks.

About Seadrill

Seadrill Ltd. engages in the provision of offshore drilling services to the oil and gas industry. It operates through the following segments: Floaters, Jack-up rigs, and Other. The Floaters segment encompasses drilling, completion, and maintenance of offshore exploration and production wells. the Jack-up Rigs segment includes drilling contracts relate to jack-up rigs for operations in harsh and benign environments in shallow water. The Other segment represents management services to third parties and related parties. The company was founded on May 10, 2005 and is headquartered in Hamilton, Bermuda.

About Valaris

Valaris Limited, together with its subsidiaries, provides offshore contract drilling services Gulf of Mexico, South America, North Sea, the Middle East, Africa, and the Asia Pacific. The company operates through four segments: Floaters, Jackups, ARO, and Other. It owns an offshore drilling rig fleet, which include drillships, dynamically positioned semisubmersible rigs, moored semisubmersible rig, and jackup rigs. It serves international, government-owned, and independent oil and gas. Valaris Limited was founded in 1975 and is based in Hamilton, Bermuda.